3 Ways the Stimulus Package Changes Retirement Planning 

Here are the 3 Biggest takeaways from the Stimulus Package that could impact your retirement 

#1: Required Minimum Distributions are suspended for 2020 for IRA’s and workplace plans.

Since RMDs are calculated by using the 12/31/2019 values, people would be taking a considerably larger percentage out of their IRAs if they were to take their RMD this year. 

This bill allows them to wait until 2021.

Thankfully, the people we help plan for have this money earmarked in conservative funds, ready to withdrawal so their income plan and retirement  shouldn’t be affected because of the recent volatility. 

Up to $100,000 will be allowed to be withdrawn penalty-free from workplace or IRA accounts 

If you’re under 59.5 the package states you can withdrawal up to 100k from your retirement plan and not pay the usual 10% penalty. 

But you still need to pay income tax, which can be spread out over 3 years. 

You may also be able to add back to your account and not pay the income tax. The add-back and calculation of tax will be prorated depending on what year you add it back.

To qualify for this, you’ll have to have been negatively impacted by this pandemic. 

Here's a video explaining more of how this works.

Loan amounts from workplace plans have increased

The limit has been increased from $50,000 to $100,000 for 180 days after the bill passes. In order to take this loan, you’ll need certification your life has been negatively affected by the Coronavirus.

This post is just a basic overview and not advice.  Be sure to contact your wealth manager and CPA before making a decision regarding your account.