If you are of retirement age, there are several features of the Coronavirus Aid, Relief, and Economic Security Act (CARES) that you may find beneficial. You may have a lot of questions about this initiative as it is fairly complex and new details are continually being released. We’ve outlined a list of features below that you may find helpful.
The CARES Act allows retirement savers affected by the coronavirus to withdraw up to $100,000 penalty-free from their IRA or certain types of retirement plans. Taxes will still be owed on the amounts withdrawn, however, those taxes can be paid over a three-year period. While this is an option, we encourage you to consider other alternatives prior to withdrawing from your retirement savings. It may be difficult to replenish these funds when needed later in retirement years. To see if your needs qualify for a CARES Act hardship withdrawal, please speak with your financial advisor.
The CARES Act suspends the Required Minimum Distributions (RMD) for 2020. If you have already taken your RMD for 2020, you will still owe taxes. Depending on when you took your distribution, you may qualify for a 60-day rollover back into an IRA to avoid paying taxes. Please discuss this option with your financial advisor.
Since the deadline to file your 2019 taxes has been extended to July 15, 2020, the deadline to make 2019 IRA contributions has also been extended to July 15, 2020.
The CARES Act also provides provisions for loans from retirement plans. If your retirement plan allows for loans, the loan maximum limit has increased to the lower of $100,000 or 100% of your vested balance. The due date for repayment of the loan has been delayed one year. For those who have an outstanding loan, payments may be postponed for one year. To discuss these options, please reach out to your plan administrator.
We realize that there is an overflow of information circulating about the CARES Act and it can be overwhelming. Our Wealth Management team is happy to answer questions and guide you through this process.
If you have questions, call one of our wealth management professionals at 270.831.1505 today or reach out to us directly. We want to help.
Nikki Bowling, VP Trust Officer, (270) 831-1631
Elizabeth Gibson, Trust Administration Officer, (270) 831-1518
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