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The Cares Act

Important Information

The Cares Act

How it impacts your IRA, 401k, 403b and

other retirement accounts.

There are several changes, waivers and exceptions buried inside the care which will impact your IRA, SEP, 401k, 403b and other qualified accounts.  The rules are complicated! Do not make any changes to your qualified account without consulting a tax & financial professional.  TFG Wealth Management retains a highly competent expert Denise Appleby CPA to advise us and our clients about these issues. 

Here is a brief overview of the changes, waivers and exceptions:

Required Minimum Distributions

RMDs for 2020 are waived.  No distributions are required to be taken for 2020.

Any RMDs from 2019 that were delayed until 2020 are waived.

With the exception of an employer sponsored Defined Benefit Plan.

Regular Distributions

Existing tax rules governing other distributions from qualified accounts have been relaxed if the distribution is to a coronavirus-related event for the period January 1, 2020 through December 31, 2020.  These distributions are capped at $100,000.

These events include:

  1. A person diagnosed with the coronavirus.
  2. A person whose spouse or dependent is diagnosed with the virus.
  3. A person who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to the virus.  A person being unable to work due to lack of child care, closing or reduced hours of a business owned or operated by the individual due to such virus or disease or other factors as determined by the IRS.

Changes to IRS rules include:

  1. Waiver of 10% penalty if you are under 59 ½.
  2. Extension of 60 day rollover deadline to 3 taxable year period.
  3. Ability to spread tax costs of distribution over 3 taxable years.

Increased loan amounts from your employer plan

For employer-sponsored retirement plans that permit loans, eligible participants were allowed to borrow 50% up to $50,000.  The rule is changed to 50% up to $100,000.

This information provides a high level overview of provisions made available under the care act.  As information becomes available, we will get it out to you as quickly as possible.  

Everyone’s situation is different and unique.  You can email us with your questions.  info@tfgwealth.com.  Make sure you consult with a financial and tax professional before taking any actions.

My best,

Lisa Odoski

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