It is without a question the novel coronavirus (COVID-19) is affecting the daily lives of everyday Americans as well as individuals and businesses all over. Countries around the globe are taking drastic measures to combat this pandemic.  For instance, the entire country of Italy has shut down.  In the U.S., President Trump banned travel from Europe and elsewhere the NBA and other sporting associations have suspended or cancelled their entire seasons (I don’t know about you, but I miss sports already).  There is some good news, however, as U.S. Congress is hard at work to help everyday Americans as well as lessen the impact this novel virus will have in our economy.

Retirement Plan Relief

Today, the American Retirement Association (ARA) has asked Congress to provide tax relief to retirement plan sponsors and employees who are severely affected by the novel COVID-19.  Some highlights of the relief include:

• Waive 10% early withdrawal penalty: with this proposed law, individuals do not have to pay the 10% penalty if they have a principal residence in a declared health emergency area and suffered economic loss. Generally, individuals have to pay 10% penalty if they take a plan distribution prior to age 59-1/2.
• Increase loan limits: the law will increase loan limits to the lesser of $100,000 or 100% of vested account balance (limit has doubled). Normally, plan loan limit is the lesser $50,000 or 50% of the vested account balance.
• Automatic extension: the law will provide an automatic 60-day extension of tax filing deadlines; and
• Waive 2020 RMDs: the proposed law will temporarily waive 2020 required minimum distributions (RMD) from retirement plans and Individual Retirement Accounts (IRAs).

Be assured that we will continue to stay on top of this new development and will keep you apprised.  Above all, we at NESA Plan Consultants hope you and your family stay safe.