Ch-Ch-Changes - Turn And Face The Strange
As we navigate COVID-19 together, there are continuous changes in legislation impacting 2020 tax laws, provisions and deadlines.
Given this column is turned in mid-month and limited in space, consider these as some starting off points to discuss with your advisor or Certified Financial Planner to see how you and your family may be able to take advantage or access if needed.
Realize there will have been a second stimulus package (at least there better be), let’s discuss a few items from the CARES Act (Coronavirus Aid, Relief, and Economic Security).
This 880-page bill contains a number of provisions, some to consider:
Contribution deadlines to make tax year 2019 traditional and ROTH contributions now falls on 7/15/20. The deadline to make tax year 2019 SEP, SIMPLE and QRP contributions will stay at the original tax filing deadline plus extensions, 10/15/2020.
Required minimum distribution (RMD) requirements are waived in 2020. This is applicable for both retirement accounts and inherited IRAs. If your institution automatically calculates and distributes in December, check to see if they changed to void requests in 2020 unless notified differently. Furthermore, if you’ve already taken your 2020 RMD, it can be rolled back into accounts.
IRA withdrawals up to $100,000 without the 10% premature withdrawal penalty, if diagnosed with coronavirus or suffer financial harm due to coronavirus. Keep in mind, you’ll still pay earned income tax if in a traditional IRA.
Retirement plan loans have doubled to 100% of their balance or a maximum of $100,000. Keep in mind, if you do this and get laid off, you have 60 days to repay or it will be a sizable taxable event.
Student loan payments and interest accruals are waived until September 30, 2020.
Beyond CARES Act, there are several instances of long-standing provisions that can come into play.
Did you pay college expenses with a 529 plan and get a refund? Well, you have 60 days to deposit these funds back into the 529 plan otherwise it becomes a taxable event, which isn’t pretty. Talking about a 10% penalty and taxed as earned income.
I’ll say it again, there are hundreds of Certified Financial Planners who can work with clients 100% electronically to enter an engagement, learn about your situation, deliver a plan and help with execution. You don’t need to wait or feel compromised to take needed action.
Thank you to all those who are supporting our essential needs and bringing both rationale and comfort in our collective time of need.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Glenn Brown is a Holliston resident and owner of PlanDynamic, LLC, www.PlanDynamic.com. Glenn is a Certified Financial Planner™, Chartered Retirement Planning Counselor and fee-only fiduciary helping savers, business owners and Sandwichers evolve their financial independence.
This article appeared in the May editions of Holliston Local Town Pages, Ashland Local Town Pages and Natick Local Town Pages.
Please call me at (508) 834-7733 or directly schedule a meeting to learn more about considerations for planning and investing so you can balance kids, aging parents and your financial independence.
PlanDynamic, LLC is a registered investment advisor. This article is intended to provide general information. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain a better understanding of the subject or the article. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable.
Market data and other cited or linked-to content on in this article is based on generally-available information and is believed to be reliable. PlanDynamic, LLC does not guarantee the performance of any investment or the accuracy of the information contained in this article. PlanDynamic, LLC will provide all prospective clients with a copy of PlanDynamic, LLC’s Form ADV2A and applicable Form ADV 2Bs. You may obtain a copy of these disclosures on the SEC website at http://adviserinfo.sec.gov or you may Contact Us to request a free copy via .pdf or hardcopy.