The COVID-19 crisis fundamentally changed society in many ways and spread through the world like a wildfire. While much of the United States stayed home in isolation, the federal government passed the Coronavirus Aid, Relief and Economic Security Act to help relieve the burden on families, businesses, and local governments.
The CARES Act is expansive and contains many provisions, but what does that mean for the financial wellbeing of your family? We’ll examine some aspects of the Act that impact your family finances and the pros and cons of taking advantage of these temporary measures.
You’ll be able to make educated decisions and determine which are best for you.
CARES Act and Individual Retirement Accounts
With the country in isolation, many people were left with jobs temporarily suspended or laid off from work. The CARES Act allows people having a hardship to remove up to $100,000 from their IRA without the usual 10 percent penalty.
The money is considered taxable for that year. You can pay the amount back into the account over the next three years. If you have a 401(k), then you can take an increased loan amount of $100,000 or all your 401(k) if the amount is less than that. Before the legislation, the maximum loan amount was $50,000.
Federal Tax Deadline Extended
Coronavirus hit the country in the prime of tax season, leaving many people either unable to have their taxes done or without the income to pay off their tax debts. Many of the accountants and tax preparation companies shut down because of the coronavirus.
The government understood that this would be a problem and extended the tax filing deadline from April 15 to July 15, 2020. It allows an extension of an IRA holder to contribute for the 2019 tax year.
Take Advantage if You Can
If your family is financially disrupted because of the COVID-19 epidemic, then take advantage of the CARES Act stipulations. You don’t need to take the full amount from your 401(k) or IRA unless it is needed.
These are still designed for your retirement, so if you do take money out try to have it repaid so it doesn’t negatively impact your portfolio or your retirement plans. You’ve spent years building it up, so keep your future safe.If you want more information on the CARES Act or IRAs, then contact a Quest IRA specialist.