In addition to the catastrophic health situation caused by the Coronavirus, many people are also getting hurt financially, especially in their retirement accounts. However, some help is on the way as Congress just approved The Coronavirus Aid, Relief, and Economic Security Act, also known as the ‘CARES Act’. This act changes many retirement rules and regulations and is designed to provide immediate funding and tax relief.
There are many parts of this act, including help for small businesses, corporations, hospitals and health care clinics as well as help for individuals. This bill is brand new and many of the finer details are still being finalized. But today, let’s get into the main areas of the CARES Act we know about for sure now, as they relate to retirement planning.
The bill provides financial help and assistance for pre-retirees and retirees in many areas, such as:
- Tax filing deadline extended to July 15, 2020 for the 2019 tax year
- Deadline also extended to July 15th for contributing to a traditional and/or Roth IRA for the 2019 tax year
- Allowance for partial above-the-line tax deduction for charitable contributions without having to itemize
- 10% early distribution penalty waived on up to $100,000 of distributions from IRAs and company plans for ‘Coronavirus-affected individuals’
- Required minimum distributions (RMDs) waived for 2020
In addition to these law changes, there are also several strategic moves many people can make financially to take advantage of the current market environment and improve their retirement plan.
As the Coronavirus outbreak continues to wreak havoc on the global economy and financial markets, people are facing significant and unique challenges with their financial and retirement plans. Successful navigation of these challenges will require thoughtful and comprehensive planning. You will need to learn about these new rules and laws in order to take advantage of them and to benefit your planning in the best way possible.
To learn more about the CARES Act in greater detail and about how to specifically take advantage of these new rules and options, visit The Prepare Institute website and find an upcoming education retirement course in your area.
Content is for educational and informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should contact your retirement and tax professional before utilizing any of the information in this article.