Not This Year

The CARES Act has provided sponsors of defined benefit pension plans a one-year holiday from their required annual pension contribution, i.e., they do not have to contribute to their pension plans during calendar year 2020 (source: CARES Act, BTN Research).

Market Rally or New Bull Market?

The S&P 500 gained 12.8 percent (total return) in April, its first double-digit gain since October 2011 and its best month since January 1987. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

In the Year 2034

Social Security trustees announced on April 22 that the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034. A zero trust fund does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 76 percent of their originally promised levels through the year 2095. When the trustees released their report in 2010, the Social Security Trust Fund was projected to be depleted in 2040 (source: Social Security Trustees 2020 Report, BTN Research).

As we digest today’s sobering headlines, conflicting reports and startling predictions related to COVID-19, it’s easy to feel rather powerless. Across the globe, researchers are scrambling to learn about the disease and leaders are struggling to protect their citizens’ health and their nations’ economies. On an individual level, our normal routines have been shattered, and we wonder what the future will hold. 

In these uncertain times, the compulsion to hoard money, food or even toilet paper is natural. Building up our reserves may restore a small sense of control. Certainly, it is prudent to save more and stock up on some things. But giving may actually do more to ease feelings of helplessness. Instead of dwelling on what we can’t change, giving focuses on the difference we can make.

Needs are particularly great now. Many nonprofits, particularly those that provide safety net services, are facing the greatest demand they’ve seen. Increased requests are coming at the same time organizations are unable to hold normal fundraising events, some donors are unable to give and others are supporting candidates in this year’s political campaigns.

The good news is, the CARES Act, the $2 trillion stimulus package President Trump signed on March 27, increases federal tax deductions for qualifying charitable donations. Under CARES, even taxpayers who do not itemize on their return (an estimated 85 percent of us) can deduct up to $300 for charitable cash contributions.¹ To ensure an organization qualifies, enter its Employer Identification Number at apps.irs.gov/app/eos/.  

CARES also removes the limit on deductions for charitable cash gifts if you itemize. Previously, you could not deduct more than 60 percent of your adjusted gross income. Under CARES guidelines, you may donate your entire taxable income to qualified organizations and not owe federal taxes on that income.² Contributions to private foundations or donor advised funds do not apply.

Contact our office if you need help weighing how much to donate to your favorite cause or to schedule a joint meeting with your other professional advisors.

Securities America and its financial professionals do not provide tax advice. Coordinate with your tax advisor regarding your specific situation.

¹https://taxfoundation.org/standard-deduction-itemized-deductions-current-law-2019/

²https://www.forbes.com/sites/morgansimon/2020/04/08/now-is-a-great-time-to-give-new-charitable-rules-incentivize-generosity-during-covid-19/#61dadf266d2e

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright May 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3080678.1