The government is working to assist Americans and businesses directly in a number of ways: President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law to help Americans in the wake of the coronavirus pandemic. The legislation provides a one-time payment of up to $1,200 to individuals, and $2,400 to couples, plus an additional $500 per child, for those within the income thresholds. Retirees and Social Security recipients are also eligible for payments, whether or not they normally fill out a tax return. Eligibility is based on 2019 tax returns, or 2018 tax returns if someone hasn’t filed for the 2019 tax year yet.
The federal government is also helping retirees by suspending Required Minimum Distributions for 2020. If you haven’t taken an RMD for 2020 yet, you don’t have to – this also applies to inherited 401(k)s, IRA, or other retirement accounts. This provides more time for account balances to recover from the market drop, and also gives the opportunity for a tax break. By withdrawing, you would lock in losses and pay tax on the amount distributed from a traditional 401(k), IRA, or other retirement accounts.
There is also relief available for small businesses through Economic Injury Disaster Loans and Paycheck Protection Loans. The Small Business Administration is working to get grants and loans to small businesses with under 500 employees, nonprofits, and veterans organizations during this time. Small businesses may be eligible for forgivable and temporarily deferrable loans to help pay costs such as payroll, mortgage interest, rent, or utilities.
No one knows when the coronavirus crisis will be over, but that doesn’t mean there aren’t steps you can take right now to help protect your future financial security. We can help you create a comprehensive plan that takes market downturns into account. You can sign up for a complimentary financial review so that we can look at your unique financial situation and needs.