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Act By The End of 2020 For A Major Retirement Income Tax Break
(Tuesday, July 14, 2020, 10:45 p.m. EST) A confluence of events have suddenly aligned to create a major tax planning opportunity for individuals who are currently taking IRS-mandated required minimum distributions (RMDs) from an individual retirement account or are about to start taking RMDs.
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Business Owner Alert: Main Street Lending Program Offers Covid Aid
(Tuesday, July 7, 2020, 7:09 p.m. EST) Business owners who were unable to qualify for federal Covid-crisis emergency assistance from the Payment Protection Program (PPP) need to know about the Main Street Lending Program (MSLP).
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Financial And Tax Planning For The Long Run
(Tuesday, June 30, 10 p.m. EST) After paying a terrible price in lost lives, suffering, and grief, the Covid economic crisis will pass, along with emergency tax relief in the history-making $2.2 trillion CARES Act of 2020. The tax law with us permanently, and the rules that will be affecting you every year for years to come, is the SECURE Act.
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A Constellation Of Facts Squarely Aligns With 2020 Roth IRA Conversions
(Wednesday, June 24, 9 p.m. EST) An unusual confluence of financial, tax and investment events make converting traditional retirement account assets to Roth IRAs compelling in 2020 to retirees and those about to retire.
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Covid-19 Tax Break Suspends Required Minimum Distributions
(June 16, 2020; 10 p.m. EST) Federal emergency aid legislation suspends required minimum distributions (RMD) for 2020. If you do not need the income from your IRA or retirement plan, here are tips to maximize the benefit and build your retirement income portfolio.
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PPP Update For Business Owners
(Tuesday, June 9, 2020, 9:07 p.m. EST) The Paycheck Protection Program Flexibility Act (PPPFA) of 2020 modified terms of forgiveness for loans to businesses under the Paycheck Protection Program (PPP) on June 5, 2020.
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Business Owner Alert: Covid-19 Retirement Loans
(Tuesday, June 2, 2020, 9:07 p.m. EST) Business owners are in a tight spot: Federal tax rules have eased restrictions to allow those harmed by the epidemic to borrow from their IRA or federally qualified retirement plan; but without careful planning, business owners taking a loan from your retirement savings to support your business could land you in an even worse personal financial position if you are unable to repay it. . Here's what business owners facing challenges need to know now.
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Coronavirus Tax-Breaks For Individuals; Details Emerge From IRS
(May 26, 2020, 8 p.m. ET) The new Coronavirus federal aid package, the CARES Act, expands options for distributions from IRAs and qualified retirement plans.
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Coronavirus Tax Planning Alert
(May 20, 2020, 8 p.m. ET) As mandated by the Coronavirus Aid Relief & Economic Security (CARES) Act on March 27, individuals harmed by the epidemic may make withdrawals from an IRA, 401(k) or 403(b) account before age 59½ without facing the usual 10% federally-imposed early withdrawal penalty.
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Amid The Awful News, Some Good Signs
(May 13, 2020, 4 p.m. ET) During this bleak period in world history, amid the terrible news of death, sickness and financial destruction, there are reasons for hope and promising signs of a U.S. recovery from the Covid-19 pandemic.
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Planning Briefs
Act By The End of 2020 For A Major Retirement Income Tax Break
(Tuesday, July 14, 2020, 10:45 p.m. EST) A confluence of events have suddenly aligned to create a major tax planning opportunity for individuals who are currently taking IRS-mandated required minimum distributions (RMDs) from an individual retirement account or are about to start taking RMDs.
A provision of the CARES Act the Covid crisis emergency aid law in effect since March 27, 2020 -- lets you skip your required minimum distribution in 2020. Since many individuals of RMD-age (72 and above) have been remaining homebound during the Covid crisis and are spending less, skipping all or part of an RMD is easy and often makes sense over the long term. Skipping an RMD in 2020 would leave that money in the IRA to compound tax-free over a longer time period.
Here's where the unusual alignment of factors takes a special twist. Instead of skipping your 2020 RMD and simply leaving it in your retirement account , you can withdraw all or part of it, pay the income tax on the withdrawal amount and use that amount to fund a tax-free Roth IRA!
Distributions taken as RMDs from pre-tax retirement accounts are always taxable whereas distributions from a Roth IRA are never taxable! Converting assets to a Roth IRA in this manner could provide tax-free income for years, and when you die, to your spouse and your IRA beneficiaries for the life of the Roth IRA.
2020 also happens to be a particularly good year to convert assets from a traditional pre-tax retirement account to a Roth IRA. Why? Because when you withdraw assets held in a traditional IRA or other qualified pre-tax retirement account, you will owe income tax on the withdrawals. The unusual confluence of events making it possible for you to live on a lower income during the Covid crisis creates this unique tax saving opportunity for long-term investors who act before December 31, 2020.
With stock prices still off their all-time highs and continuing to suffer frequent and often vicious one-day drops, taking the opportunity to sell stocks in your retirement account and converting the proceeds into a Roth IRA makes particularly good sense. In addition to selling these stocks when they are relatively cheap, you would also be realizing the taxable income from the retirement account at a time when the Covid crisis has kept your expenses low.
Between now and the end of 2020, the unusual confluence of events makes it wise to evaluate skipping a required minimum distribution and converting to a tax-free Roth IRA. It is a major tax saving opportunity that you do not want to miss.
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