Retirement accounts Could bring
Relief to Some by Shelly Dodge, President and Financial Advisor at Visionary Financial Group
W
e are living in unprecedented times which cause concern for all of us. As our government continues to find creative ways to lift some of the burden, I felt it was timely to share the information below regarding some recent changes to retirement accounts.
Although, any other time my advice would be to use your retirement accounts as a last resort, these times may call for extreme measures. Keep in mind, retirement funds are an essential part of your financial well-being. It’s never a good time to pull retirement funds out early, but when your retirement accounts are already down in value, this becomes double-trouble.
photo courtesy of Shelly Dodge
On Friday, March 27, 2020, new legislation was signed into law that aims to provide relief to Americans and businesses negatively impacted by COVID-19 crisis. This legislation, known as The Coronavirus Aid, Relief and Economic Security (CARES) Act, is a $2 trillion relief package that includes direct monetary payments to Americans as well as various business subsidies to counteract some of the adverse economic conditions resulting from the pandemic. Additionally, the law provides several new relief provisions pertaining to retirement accounts (for those who qualify). Some of these time-bound provisions include the following: •
Penalty-free distributions from retirement accounts: The CARES Act waives the early withdrawal penalty for “coronavirus-related distributions” up to $100,000 from qualified (retirement) plans. Prior to the CARES Act, plan participants
26 | LIFE IN CASTLE HILLS | APRIL 2020
under age 59½ were subject to a
10% penalty if they made withdrawals from their retirement plan, such as a
Required Minimum Distributions suspended: The CARES Act
suspends required minimum
401(k) or IRA. Distributions are still
distributions (RMDs) from tax-
be paid over a three-year period.
one year. The suspension of RMDs
pay back the distribution to avoid
to withdraw from their accounts.
taxable to you as income. This can
deferred retirement accounts for
You also have up to three years to
shields retirees from being mandated
some or all of the taxes. •
•
The above are just a few highlights of
Increase on loan amount from
the Act. The legislation is very extensive
period following the enactment of
for small and medium sized businesses,
qualified plans: For a 180-day
the CARES Act, qualified individuals can take out loans from their 401(k)
up to $100,000, up from the previous amount of $50,000 (if your plan
allows it). Outstanding qualified
loan repayments may be suspended for 1 year.
and includes additional relief provisions individuals and households, among many others.
972.539.0002
sdodge@nextfinancial.com.
www.visionaryfinancialgroup.com. Securities and investment advisory services offered through NEXT Financial Group, Inc., Member FINRA/SIPC. Visionary Financial Group is not an affiliate of NEXT Financial Group, Inc.
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