There are three bills enacted to help mitigate the economic impact of the Coronavirus pandemic:
- The Families First Coronavirus Response Act
- The Coronavirus Preparedness and Response Supplemental Appropriations Act
- Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Here are six key takeaways from these bills we feel may be of primary importance to our clients.
- New Income Tax Filing Dates - The deadline for filing 2019 income tax returns is now July 15, 2020. The deadline for making 2019 IRA and HSA contributions has thus also moved to July 15, 2020. Deadlines for contributions to workplace savings plans have not changed. Please check with your state for any changes to state filing deadlines.
- Required Minimum Distributions - The required minimum distributions (RMDs) for 2020 on some retirement accounts has been waived. For more specifics on your account, please call us.
- Direct Payments – The CARES Act included a provision that will send $1,200 to most Americans with income under $75,000 and $2,400 for joint filers under $150,000. This amount will reduce for people with higher incomes and become zero at income levels of $99,000 for individuals and $198,000 for couples. You can also receive up to $500 per dependent child ($3,400 maximum).
- 10% Early Withdrawal Penalty Waived for Workplace Retirement Plans - Those with workplace retirement plans and individual retirement accounts (IRAs) can take aggregate distributions of up to $100,000 for COVID-19-related purposes without incurring the 10% early withdrawal penalty. Those who chose to take an early distribution still have to pay federal income tax on the distribution but can spread it over a 3-year period or they have the option to repay the distribution within a 3-year period back to an eligible retirement plan.
- Student Loan Aid – Provisions have been made to help those with student loans. These provisions include suspended payments of federal student loans for six months and waiving interest on the loans for six months.
- Small Business Relief - $350 billion has been allocated to help small businesses through the crisis and keep their workers employed. Known as the Paycheck Protection Program, federally guaranteed loans will help many small businesses during this time of crisis.
This is for educational purposes only. Please talk with your tax preparer about your specific situation.
Could it get worse, or will it get better? How long will this last?
We know these are many investors primary questions. A large part of the answers will depend on when the growth rate of COVID-19 cases stabilizes and how quickly a cure can be developed and distributed. It will also depend on whether or not fiscal and monetary emergency measures are enough to help ease the economic crisis. While we are not clairvoyant, we are making our best efforts to stay aware of changes that could affect your personal situation. Our objective is to try to offer the most educated guidance to help keep you on track with your financial goals. We realize that this is a very emotionally straining time and we want to make sure you know we are here for you. Call us with any questions or help with any concerns you may have.
Panic and bad choices can cause more harm for investors than a virus or market downturn.
If you, a friend, or family member is worried about retirement right now, I'm offering a Free No-Obligation COVID-19 Financial Planning Consult. For more information or to sign up, click here.