The passage of the federal CARES and SECURE Acts encourages charitable contributions.
The CARES Act (Coronavirus Aid, Relief, and Economic Security) passed in March 2020. The relief package includes opportunities for donors to help the Berkeley Student Cooperative as we respond to the growing needs of our community due to COVID-19. The changes include:
- Encourages contributions to charitable organizations in 2020 by permitting a deduction of up to $300 of cash contributions for non-itemizers.
- Increases the limitations on deductions for charitable contributions by families who itemize. For individuals, the 50 percent of adjusted gross income limitation is suspended for 2020.
- Up to $1,200 ($2,400 joint) in income-tax free federal benefit per taxpayer making less than $75,000 ($150,000 joint). Donating this to the Berkeley Student Cooperative will earn a charitable tax deduction.
- Waives the required minimum distribution rules for certain defined contribution plans and IRAs for calendar year 2020. Making an income tax-free gift from your IRA to the Berkeley Student Cooperative is still allowed.
The SECURE Act (Setting Every Community Up for Retirement Enhancement), passed in January 2020. It includes changes to Individual Retirement Accounts. The changes include:
- Removing the age limit for contributing to IRAs. You may now contribute to your IRA beyond the previous age cap of 70 1⁄2. However, contributing to your IRA after 70 1⁄2 can affect your ability to support the Berkeley Student Cooperative, making it more expensive to both save and give. Seek guidance if you continue to contribute to your IRA after age 70 1⁄2!
- You do not have to take required minimum distributions (RMDs) until age 72. That’s an increase from the long-standing 70 1⁄2 or older. The CARES act waves required minimum distributions entirely for 2020. You can still use distributions to support the Berkeley Student Cooperative and avoid income tax after age 70 1⁄2, and before distributions are required at 72.
- Non-spouse heirs who received IRAs must withdraw the entire balance within 10 years. That’s a change from the “stretch option” in place prior to the new law.
Donors should contact the BSC to coordinate securities transfers. Gifts of appreciated securities like stocks and bonds avoid capital gains tax while also allowing charitable deductions. Click here for more information on how to gift securities to the BSC.
If you are 70 1/2 and older, you can donate up to $100,000 tax free from your IRA and satisfy your required minimum distribution.
Provide for a future gift to the BSC by including a bequest in your will, living trust, or testamentary trust. By informing the BSC of your legacy gift you help us prepare for the future. Equally important, you also give us the chance to thank you for your generosity.
Name the BSC as a beneficiary on your IRA, 401(k), or other qualified plan.
Enjoy income for life, charitable deduction, favorable capital gains tax treatment, and no estate tax with a charitable gift annuity managed by the Silicon Valley Community Foundation.
Create a trust that makes annual payments to the BSC for a specified period. When the trust terminates, the remaining principal is paid to your heirs.
Leverage your donations to the BSC by donating ownership of a life insurance policy to the BSC. We will receive the premium notices, and you will make annual tax-deductible donations to offset our payments.
You can also name the BSC the irrevocable owner and beneficiary of a paid-up life insurance policy on your life. You will receive an immediate charitable deduction for your gift. It will be the lesser of the policy's fair market value or the total of your net premium payments.
Or, simply name the BSC as a beneficiary on your life insurance policy, reducing your taxable estate.
Make a substantial gift to the BSC through a transfer of residential, commercial, or undeveloped real estate. If you transfer the property subject to a life estate, you can continue to live in the property while you pay for taxes, insurance, and maintenance.