As if life isn't challenging enough these days, I'm strongly encouraging you to read about some significant changes to the tax laws. It's important to familiarize yourself with how the new rules in the SECURE Act and CARES Act can affect your life -- whether you're in your 20's or in your 80's.
Summarized below are some of the more salient provisions along with practical planning actions to consider taking.
Required Minimum Distributions -- You don't need to start taking RMDs from your retirement accounts until Age 72. On top of that, you don't have to take RMDs in 2020 at all.
Planning Tip: Depending on your particular situation, a partial Roth IRA conversion may make sense. In fact, a conversion may make sense even if you are a long way from retirement.
Inherited Retirement Accounts -- For people passing away beginning in 2020, beneficiaries of retirement accounts must distribute the money they inherit within 10 years. Exceptions exist for spouses, minor children, disabled individuals, and people less than 10 years younger than the decedent.
Planning Tip: If you have a trust listed as a beneficiary, please contact your attorney to see if it still makes sense in the new environment. Many trusts will need to be revised.
Hardship Withdrawals and Loans from Retirement Accounts -- Certain individuals impacted by the coronavirus can withdraw up to $100,000 without penalty, but taxes need to be paid within three years; however, the money may be paid back within that time frame to avoid the tax consequences. Loans of up to $100,000 can also be taken from certain employer-sponsored plans (not IRAs) with no payments due in 2020.
Planning Tip: These actions should be utilized as a last resort to avoid impairing your retirement savings.
Additional rules and further information can be found by clicking the links above. I'm happy to discuss these matters with you in greater detail. You should, of course, consult a tax advisor before taking any particular action.
These days require some upbeat music. But, if you wish to indulge a more melancholy mood, I recommend The Smiths. Check out these brilliant, misanthropic tunes: "What Difference Does It Make?," "Heaven Knows I'm Miserable Now," and "Panic".