SigMT Vol13 Iss 3

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SiG MT 94 FACTS ON FINANCE ARTICLE PROVIDED BY SHARON HANCOCK Congress has issued an economic stimulus package to help individuals and businesses endure financial hardship caused by the COVID-19 pandemic. Having access to retirement funds can help lessen the negative financial impact of being out of work for a continuous period of time. Here are the distribution relief options available for retirement accounts: • Retirement plan loan distribution limits doubled and repayment terms soened • Special hardship distribution options introduced • Required minimum distributions (RMDs) for 2020 postponed Retirement Plan Loan Distributions Congress has proposed changes to some of the existing rules for taking a loan distribution from a retirement plan along with adding some special features to help qualified individuals get back on their feet. ese changes: • Double the current plan loan limits to the lesser of $100,000 or 100% of the vested account balance • Allow existing repayments and interest to be delayed during the months following the pandemic for up to 12 months Hardship Distributions for Is and Retirement Plans e stimulus package also provides the opportunity for qualified individuals to take a special hardship distribution of up to $100,000 from their I or retirement plan. Individuals are qualified if they have: • Contracted COVID-19 • A spouse or dependent who contracted COVID-19 • Experienced financial hardship from quarantine, being laid off, furloughed, a reduction of work hours due to the virus, or due to lack of child care due to the virus • Met other factors as determined by the Secretary of the Treasury What are the special withdrawal provisions? e new provisions allow individuals to: • Withdraw up to $100,000 or 100% of the vested account balance • Avoid the 10% early withdrawal penalty if below age 59½ • Take up to three years to repay the distribution to their retirement account • Stretch income reporting over three years to lessen ordinary income tax implications Considerations for Taking Advantage of One of the Distribution Relief Options • Your ability to pay the money back to your retirement account within the alloed time • Potential significant tax implications if the money is not recontributed to the plan • Selling securities to take the withdrawal means potentially selling positions that are currently undervalued, thus locking in your losses • Opportunity costs of geing out of the market now, especially if your asset value is down – by selling shares and receiving the cash, your money is no longer benefiing from compound and tax-deferred growth over time Required Minimum Distributions (RMDs) In general, RMDs must be taken annually for anyone age 72 and older. However, a temporary waiver for calendar year 2020 allows individuals to forgo the distribution. is waiver includes distributions that were required to be taken by April 1, 2020. Before taking advantage of the above special distribution options, please feel free to call Stifel's Great Falls office to discuss your options! Article provided by Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, which can be reached in Great Falls at (406) 761-3500. Stifel does not provide legal or tax advice. You should discuss your particular situation with your legal and tax advisors. S MT Retirement Account Distributions Relief in Response to COVID-19

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