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  • Eric Walter, CFP®

What You NEED to Know!

Congress just passed two very important pieces of legislation- the SECURE Act & the CARES Act. Both have many important provisions. Some of the financial planning highlights are below*:

SECURE ACT (Setting Every Community Up for Retirement Enhancement) 12/20/2019:

  • RMDs delayed to 72 from 70.5;

  • IRA contributions may continue past age 70.5 (Earned income requirements still apply.);

  • Most non-spouse IRA beneficiaries must distribute all funds by end of 10th year after IRA owner’s death;

  • 401(k) plans may offer annuities;

  • 529s may be used for apprenticeships, student loan payments, and other elementary & secondary education costs;

  • Children’s unearned income taxed at parent’s marginal tax rate;

  • Several changes to employer retirement plans making them more accessible and cost effective.

CARES ACT (Coronavirus Aid, Relief, and Economic Security) 3/27/2020:

  • 2020 RMDs for IRAs & 401(k)s suspended;

  • Based on the 2019 tax return (2018 if not filed), many individuals will receive up to $1,200 (phased out beginning at $75,000 of AGI for single filers & $150,000 for joint), plus $500 per child 16 or under.

    • Caveat- payment is an advance on a 2020 refundable tax credit;

  • The April 15th tax filing deadline moved to July 15th (SWM ALL CLIENT EMAIL 3/27/2020);

  • First quarter 2020 estimated tax payments are postponed to July 15th;

  • For tax filers who itemize, 2020 charitable deduction limit increased; for those using the standard deduction, up to $300 may now be deducted for AGI;

  • Unemployment benefits expanded to the self-employed, independent contractors, and others; increased by $600/week up to 4 months;

  • 401(k) loan limit increased to $100,000 from $50,000;

  • 10% early withdrawal (up to $100K) penalty from retirement plans waived for coronavirus-related purposes, retroactive to January 1st; may claim this income over 3-years;

  • Coronavirus-related retirement fund distributions may be repaid within 3 years;

  • Federal student loan payments & interest accrual suspended until September 30th;

  • Paycheck Protection Program helps small businesses make payroll and cover other expenses (www.sba.gov).

*Please consult your tax preparer or CPA for guidance on your specific situation or for information on additional provisions.

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