DuPont Wealth Management
  • Home
  • About
  • Services
    • Fraud Protection
    • Blue Ocean Consulting
    • Circle of Wealth University
    • Estate Plan Navigator
  • How We Do Our Work
  • Resources
    • Blog
  • Book
  • Free Gift
  • Contact
  • Retirement Architecture
  • Retirement Tax Savings
  • For Retirees Only
  • Second Opinion

Blog

The CARES Act: What Does it Mean for Your Retirement?

4/15/2020

0 Comments

 
Picture
​On March 27, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act, which provides economic support to Americans who have been impacted by the coronavirus pandemic. You’re probably familiar with the highlights of the bill:

  • Direct payments of up to $1,200 for single taxpayers making less than $75,000 and up to $2,400 for married couples making less than $150,000.1
  • Enhanced unemployment insurance of an extra $600 per week for four months.1
  • Forbearance options for federal mortgages and student loans.1
  • A wide range of loans, grants, and other support for small businesses.1
 
Those components are important and will certainly help many people get through this unprecedented period. However, there are some other provisions that could be important for you, especially if you’re approaching retirement or are already retired.

Extended Tax Filing and IRA Deadline 

The IRS pushed back the tax filing deadline to July 15 from the traditional April 15.2 That gives you more time to prepare your return, collect documents, and possibly implement a strategy to minimize your tax bill.
 
That also gives you more time to contribute to your IRA. You can make an IRA contribution up to July 15 and count it as a deduction on your 2019 return, assuming of course that you meet income requirements.3

401(k) and IRA Distribution Options 

It’s possible that you may need additional funds to get you through this period, especially if you or your spouse have been furloughed or have lost income. The CARES Act allows you to tap into your qualified retirement accounts through special distributions.
 
You can take a withdrawal from your 401(k) and IRA without paying the 10% early distribution penalty, even if you are under age 59 ½. The distributions are taxable, but the taxes are spread over a three-year period. However, you can also repay the distribution over that three-year period and avoid paying taxes on the distribution.3
 
While a 401(k) or IRA distribution may be helpful, it could also have long-term consequences. When you take a distribution from your account, those funds are no longer invested. That means those funds can’t compound and grow. It’s possible that you may not fully participate in a market recovery if you decide to take a distribution, which could hurt your long-term growth.

Waiver of RMDs 

Are you required to take an RMD in 2020? Not anymore. The CARES Act waives all RMDs in 2020, so there is no penalty for not taking a minimum distribution from a 401(k) or IRA. 4
 
This could be very helpful for your account balance. Your RMD would have been based on your December 31, 2019. Depending on how you are allocated, your account value may have been significantly higher on that date than it is today. That means that had the RMD not been waived, you would have potentially been required to take a substantial withdrawal from an account that had fallen in value.4
 
This may be a confusing and unprecedented time, but you have options available. We are here to help you explore those options and implement the right strategy for your retirement needs and goals. Contact us today at DuPont Wealth Management. Let’s connect and start the conversation.
Picture
https://www.thebalance.com/2020-stimulus-coronavirus-relief-law-cares-act-4801184
2https://www.irs.gov/coronavirus
3https://www.marketwatch.com/story/this-is-how-the-2-trillion-coronavirus-stimulus-affects-retirees-and-those-who-one-day-hope-to-retire-2020-03-31
4https://www.aarp.org/money/investing/info-2020/cares-act-retiree-tax-benefit.html

Fee-based financial planning and investment advisory services are offered by DuPont Wealth Management a Registered Investment Advisor in the State of Indiana. Insurance products and services are offered through DuPont & Associates, Inc. DuPont Wealth Management and DuPont & Associates, Inc. are affiliated companies.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19977 - 2020/4/7
0 Comments



Leave a Reply.

    Archives

    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    May 2020
    April 2020
    March 2020
    February 2020

    Categories

    All
    2020
    COVID
    Economic Update
    Election
    Financial Planning
    Fourth Quarter
    Market Update
    Volatility

    RSS Feed

DuPont Wealth Management

523 S Buffalo St
Warsaw, IN 46580
Ph. (800) 234-4452
Em. [email protected]
​
Picture
Picture
Picture
As seen in:
Picture
Picture
Picture
Picture
Picture
HOME
ABOUT
SERVICES
FRAUD PROTECTION
BLUE OCEAN CONSULTING
CIRCLE OF WEALTH UNIVERSITY
HOW WE DO OUR WORK
RESOURCES
BOOK
​CONTACT​
Fee-based financial planning and investment advisory services are offered by DuPont Wealth Management a Registered Investment Advisor in the State of Indiana. Insurance products and services are offered through DuPont & Associates, Inc. DuPont Wealth Management and DuPont & Associates, Inc. are affiliated companies. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Indiana or where otherwise legally permitted.

Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the loss of principal. No Investment strategy can guarantee a profit or protect against loss in a period of declining values. Any references to protection or lifetime income refer to fixed insurance products, never securities or investment products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. 19464 - 2019/11/5

The information is not intended to be investment, legal or tax advice. The agent can provide information, but not advice related to social security benefits. The agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. For more information, contact the Social Security Administration office, or visit www.ssa.gov.

  • Home
  • About
  • Services
    • Fraud Protection
    • Blue Ocean Consulting
    • Circle of Wealth University
    • Estate Plan Navigator
  • How We Do Our Work
  • Resources
    • Blog
  • Book
  • Free Gift
  • Contact
  • Retirement Architecture
  • Retirement Tax Savings
  • For Retirees Only
  • Second Opinion