Congress has recently passed and the President has signed the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2 trillion emergency stimulus package, to help ease the effects of the resulting damage on the economy. A few of its provisions are designed specifically for individuals, such as:
• A one-time payment for those whose AGI is between certain thresholds ($75,000 to $99,000 for individual tax filers and $150,000 to $198,000 for joint tax filers). Taxpayers will also receive $500 for each qualifying child.
• The elimination of the 10% early withdrawal penalty on distributions from retirement accounts. Taxpayers will have the option to spread income taxation of these withdrawals (also called Coronavirus-Related Distributions) over three years and the ability to recontribute these withdrawals within three years.
• The suspension of Required Minimum Distributions (RMDs) in 2020 for retirement account owners and beneficiaries
• An increase in unemployment benefits for up to four months and the expansion of benefits to the self-employed and to independent contractors
• The deferral of Federal student loan payments through September 30, 2020
The provision which is generating the most inquiries from clients is the suspension of RMDs for 2020. If you were expecting to take an RMD and want to discuss the advantages of suspending it for 2020, please contact us. If you already received your 2020 RMD, you can also contact us to see if there is an opportunity to roll it back into your IRA within 60 days of the distribution so that it will not be included in 2020 taxable income.
We know how difficult things feel right now, but it’s important to be aware of these types of provisions that can potentially benefit you or someone you know. If you have any questions or want to discuss the CARES Act, please don’t hesitate to reach out.