Broker Check

The RFG Weekly Wealth Report

August 17, 2020

The Week on Wall Street

Stock prices drifted higher in an otherwise quiet news week, as a slowdown in new COVID-19 cases outweighed a Congressional impasse on a new fiscal-spending measure.


On August 17, 1936, the Employment Compensation Department of the Industrial Commission cut a $15 check to Neils B. Ruud of Madison, Wisconsin. It was the first unemployment compensation check issued in the United States.


The Dow Jones Industrial Average gained 1.81%, while the S&P 500 rose by 0.64%. The Nasdaq Composite Index inched 0.08% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, advanced 3.11%.

S&P 500 Nears All-Time High

Stock performance appeared optimistic following a decrease in the rate of COVID-19 cases nationwide and confidence that – despite a lack of progress on a fiscal-aid bill – Congress would eventually come to a spending agreement.

The industrial and financial sectors saw substantial gains, while technology stocks, following an earlier slip in the week, found some footing as the week came to a close.

The S&P 500 Index came close over the week to set a new record high. At one point on Thursday, it traded above its February 2020 record close before closing slightly lower. Stocks treaded water into Friday, as Congress recessed for the summer.

Consumer Prices Jump

On Wednesday, the Labor Department said that the Consumer Price Index rose 0.6% in July, matching the 0.6% increase in June. The increase was double the consensus estimate of 0.3%. The general view is that the acceleration in consumer prices is more indicative of a healing economy than the beginning of a higher inflation cycle.

The Fed does not appear concerned about these recent monthly price jumps. It remains more worried about disinflation. However, if inflation continues to pick up, the Fed may be forced to reconsider its COVID-19 monetary policy.


What the CARES Act means for your charitable giving

On March 27, the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act to help combat the far-reaching impacts of COVID-19. The bill provides increased tax incentives for charitable giving for individuals and corporations, signifying an intent to stimulate philanthropy throughout America.

As you look for ways to help those in need, be sure to visit our giving guidance page and understand how the following provisions may impact your charitable contributions in the 2020 tax year.

Itemized Deductions

The adjusted gross income (AGI) limit for cash contributions was raised for individual donors. For cash contributions made in 2020, you can now elect to deduct up to 100 percent of your AGI (increased from 60 percent).

Corporate Giving

The AGI limit for cash contributions was also increased for corporate donors. Corporations can now deduct up to 25 percent of taxable income (increased from 10 percent).

Non-Itemized Deductions

The CARES Act allows for an additional “above-the-line” deduction for charitable gifts made in cash of up to $300. If you are not itemizing on your 2020 taxes, you can claim this new deduction.

Established Giving Accounts

Both of these new incentives apply only to cash donations to public charities. However, there have been no changes to existing deductions for contributions made into a donor-advised fund for existing giving accounts. These changes mean you can still deduct up to 60 percent AGI in cash, and up to 30 percent AGI in appreciated assets contributed to a donor-advised fund.

Existing carry-over rules still apply, so if your donations in 2020 exceed your AGI deduction limits, you may carry forward excess deductions for up to five subsequent tax years. As always, donors should consult with their tax and legal advisors when considering their charitable giving.

IRA Qualified Charitable Distributions (QCD)

The CARES Act did not change the rules around the QCD, allowing individuals over 70½ years old to donate up to $100,000 in IRA assets directly to charity annually, without taking the distribution into taxable income.

However, remember that under the CARES Act, an individual can elect to deduct 100 percent of their AGI for cash charitable contributions. This deduction effectively affords individuals over 59½ years old the benefits similar to a QCD; they can take a cash distribution from their IRA, contribute the cash to charity, and may completely offset tax attributable to the distribution by making a charitable deduction in an amount up to 100 percent of their AGI for the tax year.

If you plan to make a large donation in 2020, this may be a smart strategy as long as you are between the ages of 59½ and 70½ and are not dependent on existing retirement funds.

As always, please contact my office with any questions or financial concerns you may have.