The new CARES Act has made most headlines and worked its way into most virtual conversations because of provisions like $1200 stimulus checks and business loans. While these provisions relate to the masses of the United States population ages 22+ and garner the most attention currently, interesting changes regarding Retirement Plans need to be touched on more considering how many people's plans these alter in the demographic bracket of 55+ currently.
For you, Here is a brief summary of the changes that are available now:
REGARDING DISTRIBUTIONS: You can personally distribute up to an aggregate of $100,000 in 2020 and avoid the 10% penalty (which is considered coronavirus related distributions) if your age at the time of distribution is under 59 ½ years old. If you stay below the $100,000 in distributions, those distributions will be exempt from the 20% withholding rules as well. In addition to these changes for contributors, the distribution will be taxed ratably over a three year period rather than in the year distributed.
REPAYMENT:
During a three year period after a (coronavirus related distribution) the recipient can contribute up to the full amount of the distribution to a retirement plan as if the contribution were a timely rollover distribution.
The time period for the distributions is Jan 01, 2020 thru calendar year-end on Dec 31, 2020.
401-K PLAN LOANS:
If you take one note from this article, take notice of the doubling of eligible money borrowed from your 401k plan. You can borrow up to $100,000 instead of the normal $50,000 from your 401K plan. Repeat, you can borrow up to $100,000 instead of the normal $50,000 from your 401K plan.
Also, the amount borrowed can be 100% instead of the usual 50% of the vested account balance.
**401K LOANS MUST BE TAKEN BY SEPTEMBER 22, 2020**
Q: "What if I already have a loan borrowed on my 401k plan?"
If the plan already has a loan, you can delay the loan payments coming due thru December 31, 2020 REQUIRED MINIMUM DISTRIBUTIONS (RMD’s) Lastly noted as an important takeaway, the Required Minimum Distributions have been waived for 2020.
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