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What's in the 2.1 Trillion Dollar Relief Fund for You

I will be slowly unpacking the details of this historic stimulus package one blog at a time. First, let's start with retirement plans. The whole key to this package is to provide access to assets so people can bridge the time gap between today and when things get back to normal. In order to do that, they are working to make retirement accounts easier to access. Here are some of the details: Required Minimum Distributions or RMD For those who were 70 1/2 or older in 2019 and due to payout an RMD in 2020, you no longer have to do so. You get a break for one year on your RMD. For those of you that have already taken one out in 2020, the IRS has not issued any guidance on that situation yet. If you were due to take out 2019 and 2020, the 2019 would be waived as well. 10% Tax Penalty removed for Pre-59 1/2 Distribution If you are under 59 1/2 and you take money out of your retirement account, you have a 10% penalty assessed against you and taxes due that tax year on the amount taken out. Now for those affected by Covid 19, the 10% is waived, and you can either pay your retirement account back the money that you withdrew over the next three years or spread out your taxes over the next three years. Maximum distribution is $100,000. Ability to Borrow from 401 K plan Increased If you have an active 401 K plan with your current employer, you can borrow up to $100,000 from the plan or 100% of the account value, which one is less. You can then suspend payments for up to one year. The old rules would limit you to $50,000 with payments starting right away. Tapping your retirement account is a last resort. Having said that, these are "last resort times. Please check with your CPA or tax professional and verify your options. The above changes in rules were based on the validity of independent research and interpretation.