The Coronavirus Aid, Relief and Economic Security (CARES) Act will have several major impacts on the retirement accounts custodied by INTL FCStone, so it is important to review your options with your Financial Advisor and tax professional for additional guidance.
- The 10% early withdrawal tax for 401(k), 403(b), and governmental 457(b) retirement plans has been suspended for COVID-19 related expenses up to $100,000.
- The distribution is still subject to income tax, but that tax can be dispersed in equal parts over three years.
- The distribution can also be repaid to a qualified retirement plan within three years with multiple installments.
- The account owner will self-certify that the distribution meets the definition of a COVID-19 related expense, including:
- The individual, or their spouse or dependent, was diagnosed with COVID-19 by a test approved by the CDC, or
- The employee is experiencing adverse financial consequences related to COVID-19 as a result of being subjected to quarantine; being laid off, furloughed, or having work hours reduced; not being able to work due to child care; the closing or reduction in hours of a business owned or operated by the individual; or other factors as determined by the Secretary of the Treasury.
- All Required Minimum Distributions (RMDs) for 2020 have also been waived.
- The 2019 first time RMD that was due by April 1, 2020 is waived.
- The 2020 Beneficiary IRA RMD is now waived.
- Repayment of RMDs already distributed in 2020 was not included in the Act.
- The 401(k) loan amount has temporarily increased to $100,000 for COVID-19 related expenses.
We want you to know that we are still here for you during this crisis. Please contact us immediately if you have any questions or concerns we can address, or speak to your tax professional.