These are extraordinary times. As we all continue to adapt with each passing day, we hope you, your families, and your friends are safe and well. Every day brings unnerving statistics and potential timelines on this virus; so now, perhaps more than ever, our biggest responsibility is to help our clients navigate this unique and challenging environment.
Many traditional face-to-face businesses are shifting to remote servicing and are learning to use innovative technological resources in light of the “stay at home” guidelines. This includes our contacts in the legal and tax fields. Our colleagues in these professions are on our mind a lot these days as we all have to face the stark reality of life changing, and perhaps even ending, abruptly. These are never fun topics to consider, but they are extremely important. Things like this current pandemic serve as sad reminders that we have to be sure we’ve covered a number of key topics as it pertains to our ultimate well-being both in terms of health and wealth.
Nobody wants to spend much time dwelling on the unpleasant “what ifs” of life. We’d rather focus on the positive ones. I know I’d rather let my thoughts drift to all the great times with grandkids, exotic travel destinations, and relaxing evenings watching the sunset. But we all know we need to put both thought and action into the less glamorous things, too. These are things like identifying who carries on the daily responsibilities of our families, being sure important documents are in place to ensure our care if we become incapacitated, assuring the proper passage of our assets, and being sure assets are maximized instead of senselessly squandered in so many ways possible during the passing of an estate. Yes, as much as we need to dream about bucket list highlights, we also need to responsibly address the lowlights. Reality reminds us that our passport isn’t our only required document for a truly at-ease mindset. We also need to include things like a Power of Attorney, Health Care Surrogate, and Last Will and Testament. If you have already developed a plan and created these types of documents, now may be a good time to review everything and verify they still reflect your accurate plans and wishes. Contact your attorney or seek a referral to ensure your plan is both developed and completed.
Be sure to ask your attorney what the remote/virtual notarization rules are for your state…. Florida Legislature has passed a statute to allow the electronic notarization but it doesn’t go into effect until July 1st. Your state may have similar statute/institution of this ability. Regardless of this – it’s important to move forward.
Even in bizarre times like these, you’ll no doubt feel more comfortable knowing you’ve taken these important steps to safeguard you and your family, both now and for the future.
As we know, the government has been active with various relief packages. One of these is known as The Cares Act. This Act has introduced some changes specific to the tax code and individual retirement plans that might impact you directly or indirectly, so wanted to be sure to point out some high points that might apply:
- The tax filing deadline for 2019 had been moved from April 15th 2020 to July 15th
- Contributions to retirement accounts can be made up until the tax filing deadline of July 15th 2020 and not April 15th
- For those individuals that fall under the RMD (Required Minimum Distribution) guidelines – those RMDs have been waived in 2020. This includes RMDs on all retirement plans to include:
Traditional IRA, SEP Simplified Employee Pension, SIMPLE IRAs, and employer plans such as 401ks, 403bs and governmental 457Bs. The suspension applies to both account owners and beneficiaries of inherited accounts (Beneficiary IRAs). This includes If you were required to take your first RMD in 2019 (you turned 70 ½ in 2019), but delayed doing so until 2020, you no longer need to take that RMD either. Any RMD scheduled to be taken in 2020 (even those from the 2019 tax year) are suspended. In this situation, because the 2020 RMD is also waived, you will get to skip two RMDs. There are specific provisions noted if you already took your RMD for 2020 and wish to return those funds to the account to avoid paying tax, there are two possible opportunities to do so:
60-Day Rollover. If your initial distribution was taken within the last 60 days, you may return the funds to the account as a 60-day rollover. You are only allowed one rollover per 365-day period, so you must not have done a rollover in the prior 365 days and you will not be allowed to do one for the next 365 days.
Coronavirus-Related Distribution. If you are already outside of your 60-day window and you are able to meet the definition for a coronavirus-related distribution, defined as:
- You are diagnosed with COVID-19
- Have a spouse or dependent who is diagnosed with COVID-19
- Experience adverse financial consequences as a result of being quarantined, furloughed or laid off or having work hours reduced due to the virus
- Are unable to work due to lack of childcare because of the virus
- Own a business that had to close or operate under reduced hours due to the virus, or
- Any other factor as determined by the IRS.
You would have three years to return the amount you initially distributed as an RMD. While the definition of this distribution type is very broad, it is not unlimited and not everyone will be able to qualify for it.
These options for return of RMDs only apply to retirement account owners—they cannot be used by retirement account beneficiaries who inherited their account from a deceased retirement account owner. Beneficiaries are not eligible to do a rollover under any circumstances.
If you have questions or would like to learn more about these options please contact us so we can explore your options.
- Revisit your “what if’s” for accuracy and if you haven’t addressed these yet, do so.
- Remember the initial Tax filing is extended to July 15th
- Review the Cares Act 2020 information noted to determine if it makes sense to take advantage of these in your situation.
- Stay well, and stay safe… If there is one thing to remember, remember this: Our country was founded and has thrived on the strength, resilience, and faith of our founding forefathers, our military, veterans and citizens. Whether you were born here or came from other parts of the world, this pandemic brings us together. Mankind will endure this and emerge stronger.
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Investing in securities underlying in currencies other than the U.S. dollar involves certain considerations comprising both risk and opportunity not typically associated with investing in U.S. securities. The security may be affected either favorably or unfavorably by fluctuation in the relative rates of exchange between currencies, by exchange control regulations, or by indigenous economic and political developments. As with any investment, there is no guarantee against potential loss. Investments in securities and insurance products are:
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