We hope this message finds everyone well. We are aware there is a lot of change, data, and information coming from multiple sources. Regardless, Journey wanted to put a quick piece together that specifically addresses Retirement Accounts and Tax Updates after passage of the Cares Act.
Elimination of Early Withdrawal Penalty:
- Waiver of the 10% early withdrawal penalty for “qualifying individuals” up to $100,000.00 from IRAs and workplace plans.
- Income tax owed on qualified distributions can be paid over a 3-year period. In addition, recontribution within 3 years could also be allowed.
- If withdrawing from a workplace plan, please contact us and your plan administrator.
- Current qualifications:
- Diagnoses with COVID- 19.
- Spouse or dependent is diagnosed with COVID -19.
- Experience adverse financial consequences as a result of being quarantined, furloughed, work hour reduction, laid off, reduction in hours because of office closing, being unable to work due to lack of childcare due to Covid-19.
2020 Required Minimum Distributions (RMD) Waived:
- All RMD’s for employer plans, IRA’s, and inherited IRAS in 2020 are waived.
- The ONLY exception is defined benefit plans. RMD is still required.
- RMD’s due in 2020 as a result of turning 70 ½ in 2019 are also exempt.
- Individuals have until July 15, 2020 to file and pay 2019 taxes.
- Deadline for eligible IRA contributions extended until earlier of filing or July 15th.
- Any specific tax questions please reach out to your tax advisor.
We know there is a lot of information floating around. Please feel free to reach out with any questions. In this world of uncertainty, we may not have all the answers, but we will help you navigate these challenging times. We appreciate each relationship.
This commentary is provided for general informational purposes only and should not be construed as personalized financial, investment, or tax advice. Information has been obtained from sources deemed reliable but is not guaranteed. Securities and investing involve the risk of loss. No strategy can assure a gain or the avoidance of loss.