The Senate’s $2 trillion coronavirus-relief bill has several breaks for American workers and retirees. Below are a few of the highlights from the 2020 bill package.
Extension of time to file and pay
- The IRS has extended the federal tax filing deadline for 2020. Individual federal income tax returns for tax year 2019 are due on or before July 15, 2020. Taxpayers also have an additional 90 days (July 15th) to pay their federal tax bill without interest or penalty.
Hardship distributions from IRA’s and 401(k) plans
- For 2020 only, people effected by the coronavirus would be eligible to withdrawal $100,000 from their retirement savings. If the individual is under age 59 1/2 the typical 10% penalty would not apply. The distributions would be taxable but the taxpayer can spread the income taxes over a three-year period. Additionally, the individual would have the option to skip the tax payments and elect to put the money back in within the three-year period.
- In order to qualify, the account owner or spouse or dependent must be diagnosed with the coronavirus or lost income due to a layoff, business closure, quarantine, reduction in hours, or an inability to work due to the lack for child care.
Required Minimum Distributions (RMD’s)
- For those starting at either age 70 1/2 (born before July 1, 1949) or at age 72 (born before June 30, 1949) the government requires them to start withdrawing a set percentage of the account balance each year.
- For 2020 there is a one-year suspension of the required minimum distributions for any RMD including inherited IRA’s.
At Total Wealth planning we help our clients every day answer these important questions and at times stressful questions. Who’s helping you?
Financial planning is complex and requires the guidance of a trusted and experienced advisor, such as a fee-only Certified Financial Planner™ (CFP®), who plans comprehensively, and with a complete understanding of your particular concerns and goals in life.
For more information about the financial planning strategies we utilize, please visit us at www.twpteam.com or contact directly Rob Lemmons, CPA, CFP® at 513-984-6696.