Kincaid Financial Resources
  • About
  • Services
  • Our Work
  • Resources & Calculators
  • Contact
  • Blog
  • Client Login
    • ChangePath
    • TD Client Portal

Blog

The CARES Act: What Does it Mean for Your Retirement?

4/22/2020

0 Comments

 
Picture
​On March 27, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act, which provides economic support to Americans who have been impacted by the coronavirus pandemic. You’re probably familiar with the highlights of the bill:

  • Direct payments of up to $1,200 for single taxpayers making less than $75,000 and up to $2,400 for married couples making less than $150,000.1
  • Enhanced unemployment insurance of an extra $600 per week for four months.1
  • Forbearance options for federal mortgages and student loans.1
  • A wide range of loans, grants, and other support for small businesses.1
 
Those components are important and will certainly help many people get through this unprecedented period. However, there are some other provisions that could be important for you, especially if you’re approaching retirement or are already retired.

Extended Tax Filing and IRA Deadline 

The IRS pushed back the tax filing deadline to July 15 from the traditional April 15.2 That gives you more time to prepare your return, collect documents, and possibly implement a strategy to minimize your tax bill.
 
That also gives you more time to contribute to your IRA. You can make an IRA contribution up to July 15 and count it as a deduction on your 2019 return, assuming of course that you meet income requirements.3

401(k) and IRA Distribution Options 

It’s possible that you may need additional funds to get you through this period, especially if you or your spouse have been furloughed or have lost income. The CARES Act allows you to tap into your qualified retirement accounts through special distributions.
 
You can take a withdrawal from your 401(k) and IRA without paying the 10% early distribution penalty, even if you are under age 59 ½. The distributions are taxable, but the taxes are spread over a three-year period. However, you can also repay the distribution over that three-year period and avoid paying taxes on the distribution.3
 
While a 401(k) or IRA distribution may be helpful, it could also have long-term consequences. When you take a distribution from your account, those funds are no longer invested. That means those funds can’t compound and grow. It’s possible that you may not fully participate in a market recovery if you decide to take a distribution, which could hurt your long-term growth.

Waiver of RMDs 

Are you required to take an RMD in 2020? Not anymore. The CARES Act waives all RMDs in 2020, so there is no penalty for not taking a minimum distribution from a 401(k) or IRA. 
 This could be very helpful for your account balance. Your RMD would have been based on your December 31, 2019. Depending on how you are allocated, your account value may have been significantly higher on that date than it is today. That means that had the RMD not been waived, you would have potentially been required to take a substantial withdrawal from an account that had fallen in value.4
 
This may be a confusing and unprecedented time, but you have options available. We are here to help you explore those options and implement a strategy for your retirement needs and goals. Contact us today at Kincaid Financial Resources. Let’s connect and start the conversation. You can reach us here.
 
 
1https://www.thebalance.com/2020-stimulus-coronavirus-relief-law-cares-act-4801184
2https://www.irs.gov/coronavirus
3https://www.marketwatch.com/story/this-is-how-the-2-trillion-coronavirus-stimulus-affects-retirees-and-those-who-one-day-hope-to-retire-2020-03-31
4https://www.aarp.org/money/investing/info-2020/cares-act-retiree-tax-benefit.html
 
 
 
 
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about investments and potential insurance products as deemed appropriate by a licensed fiduciary. This information has been provided by a Licensed Investment and Insurance Professional and does not necessarily represent the views of the presenting professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Registered Investment Advisor and Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. Advisory services offered through ChangePath, LLC, a Registered Investment Adviser with the SEC. ChangePath, LLC and Kincaid Financial Resources are unaffiliated entities. 
. 19977 - 2020/4/7
0 Comments



Leave a Reply.

    Categories

    All
    2020
    CARES Act
    COVID
    Economic Update
    Election
    Financial Planning
    Fourth Quarter
    GDP
    Market Update
    Stimulus
    Thankful
    The Market

    Archives

    February 2021
    November 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019

    RSS Feed

Picture
509.455.6911  |  [email protected]  |  [email protected]
​
6724 N Pittsburg Street,  Spokane WA 99217
HOME       ​ABOUT       SERVICES       OUR WORK       RESOURCES & CALCULATORS       CONTACT

Advisory Services offered through CreativeOne Wealth, LLC a Registered Investment Adviser. CreativeOne Wealth, LLC and Kincaid Financial Resources are unaffiliated entities.

Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the loss of principal. No Investment strategy can guarantee a profit or protect against loss in a period of declining values. Any references to protection or lifetime income refer to fixed insurance products, never securities or investment products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company.
 
The information is not intended to be investment, legal or tax advice. The agent can provide information, but not advice related to social security benefits. The agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. For more information, contact the Social Security Administration office, or visit www.ssa.gov.
  • About
  • Services
  • Our Work
  • Resources & Calculators
  • Contact
  • Blog
  • Client Login
    • ChangePath
    • TD Client Portal