In addition to other coronavirus-related relief, the CARES Act impacts retirement account owners' required minimum distributions, penalties on withdrawals and IRA contribution deadlines. Learn more at www.mtrustcompany.com....(read more)
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The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, provides significant relief to individuals and businesses affected by the COVID-19 pandemic. The CARES Act also includes provisions that impact Individual Retirement Accounts (IRAs) and other retirement plans. Here are some of the ways the CARES Act impacts IRAs and Retirement Plans. Waiver of Required Minimum Distributions (RMDs) The CARES Act temporarily waives the requirement for individuals over the age of 72 (or who turned 70 ½ before January 1, 2020) to take Required Minimum Distributions (RMDs) from their IRAs or other retirement accounts in 2020. This will help many retirees preserve their retirement accounts for when the stock market recovers from the current market downturn. Penalty-Free Distributions The CARES Act allows eligible individuals to take penalty-free distributions of up to $100,000 from their IRA or other retirement account before December 31, 2020. Eligible individuals include those who are diagnosed with COVID-19, have a spouse or dependent who is diagnosed with COVID-19, or experience adverse financial consequences as a result of COVID-19. While the penalty for early withdrawal is waived, income tax still applies to distributions. However, the tax liability can be spread over three years to reduce the impact on an individual’s income for the current year. Increased Loan Limits The CARES Act temporarily increases the loan limits for qualified individuals who borrow from their employer-sponsored retirement plan, such as a 401(k). The maximum loan amount is increased from $50,000 to $100,000 or 100% of the participant’s vested balance, whichever is less. This can provide much-needed cash flow to individuals who need it during this challenging time. However, borrowers should carefully consider the long-term impact of borrowing from their retirement account. Charitable Contributions The CARES Act also makes it easier for taxpayers to make charitable contributions. Taxpayers who do not itemize deductions on their tax return can now deduct up to $300 in charitable contributions made in 2020. For taxpayers who do itemize their deductions, the limit on cash contributions is raised from 60% of Adjusted Gross Income (AGI) to 100% of AGI for the tax year 2020. This provides a significant tax benefit for those who make large charitable contributions. Overall, the CARES Act provides important relief to individuals and businesses during these challenging times. The provisions related to IRAs and other retirement plans can help retirees, and those who need to access their retirement savings early, manage their finances during this crisis. However, it’s important to consult a financial advisor to understand the potential long-term impact of any decision regarding retirement savings. https://inflationprotection.org/how-the-cares-act-impacts-iras-and-retirement-plans/?feed_id=78191&_unique_id=641102486e6c3 #Inflation #Retirement #GoldIRA #Wealth #Investing #401kdistribution #caresact #coronavirusrelateddistributions #ira #retirementaccount #retirementaccountwithdrawal #retirementplanloan #retirementsavings #RMD #taxday2020 #QualifiedRetirementPlan #401kdistribution #caresact #coronavirusrelateddistributions #ira #retirementaccount #retirementaccountwithdrawal #retirementplanloan #retirementsavings #RMD #taxday2020
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