How will your estate and retirement planning be affected by the recently passed relief legislation in response to COVID-19?
On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) was signed into law. This act included in the $2.2 trillion-dollar stimulus package with provisions changing the rules for retirement plans. Other provisions encourage charitable giving by allowing taxpayers to deduct up to 100 percent of their adjusted gross income for cash contributions to qualified charities. T
hese changes present unique planning opportunities which can result in substantial tax savings.
Required Minimum Distributions (RMDs) are waived for 2020
If you have taken a distribution in the last 60 days you may be able to utilize the 60 day rollover rule for Traditional IRAs in order to negate the tax consequences.
Early Withdrawal Penalty Waived for Distributions Related to IRAs and 401ks
If you have a financial need, the CARES act allows for a distribution of up to $100,000 from a retirement account without penalty (for individuals under 59 1/2 years old). Tax liability related to these distributions can be extended over 3 years.
Unlimited Deduction on Cash Contributions to Charity
The CARES Act also suspends the 60 percent adjusted gross income limitation for cash contributions to qualified charities making such contributions fully deductible in 2020.