IRA. There are three provisions in recent legislation which directly affect your Individual Retirement Account (IRA):
1. Required Minimum Distributions (RMDs) for 2020 are not required.
2. Distributions prior to age 59 1/2 of up to $100,000 are not subject to the 10% excise tax in 2020.
3. Distributions of up to $100,000 this year can be reported as income over three years and/or repaid.
The suspension of the RMD rules apply to all taxpayers who are otherwise required to receive an RMD in 2020. The other two provisions apply only to IRA owners affected by coronavirus. This is defined as a person:
1. Who is diagnosed with coronavirus.
2. Spouse or dependent is diagnosed with coronavirus.
3. Anyone who experiences adverse financial consequences as a result of:
being quarantined,
being furloughed or laid off,
having reduced hours,
being unable to work due to lack of childcare,
closing or reduced hours of a business owned or operated by the participant, or
any other factor determined by the Secretary of the Treasury.
STUDENT LOANS. As a reminder as well federally backed student loan payments are suspended thru September 2020 as well. Interest is set at ZERO for that period as well. For more details go to: https://studentaid.gov/announcements-events/coronavirus
For more insights see our website and disclosures found there at BCA. As always contact us for further explanation of how these events can effect your finances.