Legislative Updates

November 11, 2021

Every day seems to bring news on the possible legislative and tax changes that are in the works in Washington. It can be hard to keep track of, but on November 3, 2021, the U.S. House Rules Committee released the third version of the Build Back Better bill. There are some modifications worth noting. This article outlines some of the more significant revisions. 

Please also mark your calendars for Thursday, December 16, 2021, 10 AM (PST), for the Legislative Update by the National Association of Charitable Gift Planners. You can register here.

Cynthia Hizami, Esq.
Legislative Chair, LACGP

A message from Janice Burrill, LACGP Legislative Chair and National Liaison: 

Hope you and yours are staying safe and healthy during these unprecedented days. As Congress continues to grapple with further coronavirus relief legislation, our LACGP Board and I wanted to forward this Advocacy Update from the National Association of Charitable Gift Planners. Please review and consider contacting your elected officials NOW to support the Universal Giving Pandemic Response Act (which would lift the cap for above-the-line charitable deductions from $300 to $4,000 for individuals and $8,000 for couples) and any other proposed legislation which promotes our philanthropic efforts. Now more than ever, our charitable community needs to be top of mind with our legislators.

Janice Burrill, JD, CAP

Sample Letter to Congress 

Contact Senators 

Contact Representatives

Legislative Update From Our October Newsletter

Year-end Charitable Planning under Recent Legislation—A Conversation Starter
By Janice H. Burrill, JD, CAP, LACGP Board Member, Legislative and National CGP Liaison

What a challenging year it has been for us all! Our legislative world is no exception. While our representatives in Washington D.C. have been preoccupied with many issues, the charitable community is continuing in its endeavors to promote philanthropy.

Planned giving can be a valuable tool for donors motivated to give during this unprecedented time, especially in light of recent tax law legislation. As we started this crazy year, the 2019 SECURE (Setting Every Community Up for Retirement Enhancement) Act had just been enacted which included many key changes to the IRA rules. One significant change was the elimination of the “stretch IRA”. Previously, IRA account holders could designate non-spousal beneficiaries and, upon death, the beneficiaries could “stretch” the required IRA withdrawals over their lifetime. This allowed younger family members to receive IRAs, take small (or no) distributions initially, and allow the accounts to grow over time. That opportunity is gone. Now the SECURE Act requires most beneficiaries to complete their withdrawals in just 10 years or pay a 50% tax penalty. Planned giving can provide a viable workaround to this IRA change. Specifically, the account holder can designate a life-income charitable vehicle as the beneficiary, usually through a testamentary charitable remainder trust or gift annuity. Upon the account holders’ death, these planned giving vehicles can be funded with the IRA proceeds and the account holder can designate an income beneficiary to receive life income, effectively quashing the 10 year payout rule. On the death of the life income beneficiaries, the remainder goes to one or more charities named by the account holder. A win-win solution for the donor, beneficiaries and charity!

In 2020, the CARES (Coronavirus Aid, Relief, and Economic Security) Act was passed to provide pandemic relief. It allows an above-the-line Charitable deduction of $300 for nonitemizers. Among other provisions, it increased the cash contribution limit from 60% to 100% of AGI in certain cases in 2020. While this deduction is generally not available for gifts to donor advised funds or supporting organizations, it does provide a considerable benefit for certain cash-rich donors.

The CARES Act also suspended the requirement in 2020 to take a required minimum distribution (RMD) from retirement plans. The SECURE Act had already increased the required age for RMDs from 70 1/2 to 72 years. Fortunately, the IRA Charitable Rollover is still available this year to donors over 70 1/2 to make qualified charitable distributions (QCDs) up to $100,000 from their retirement plans. While QCDs may not be top of mind with some donors because there is no required RMD this year, it is a convenient way to support charity especially by donors who have made similar gifts in the past.

Interest rates have hit new lows. This includes the Applicable Federal Rate (AFR) which is at a record low of 0.4% for October. This rate environment makes a charitable lead trust or gifting of a remainder interest in a personal residence extremely beneficial for donors.

Given all that’s happening in Washington, D.C., it is doubtful we will see any further legislation benefiting our charitable world before year-end. Unfortunately, the Universal Giving Pandemic Response Act, which would have lifted the cap for above-the-line charitable deductions from $300 to $4000 for individuals, did not pass. However, it did serve an important role in bringing the charitable deduction back into the debate with the possibility of inclusion in future legislation. So stay tuned and keep contacting your representatives.

As you work with donor prospects in the last months of 2020, hopefully some of these ideas may be helpful. We also can’t forget other tried and true planned giving options, including bequests, the “bread and butter” of gift planning. Many charities are seeing a large increase in bequest notifications in wills/living trusts and estate planning attorneys are busier than ever drafting and updating estate plans, including charitable planning. Donors are looking for ways to have impact. Clearly, we need to continue to be a visible resource (albeit via Zoom, social media, phone or email). Above all, patience and perseverance are necessary as we share new (plus tried and true) ideas with donors and, most importantly, let them know we value their interest and support.