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Caring For Generations

CARES Spells Relief When It Comes to Health and Retirement Plans

On Behalf of | May 27, 2020 | retirement and estate planning










“Clients get much-needed retirement relief,” notes Ed Slott in Financial Planning Magazine, referring to several important provisions in the $2 trillion CARES Act, including:

  • The date for making 2019 IRA and Roth contributions (for 2019) is extended to July 15 of this year.
  • 2019 Required Minimum Distributions (normally due by April 15 of this year), are waived, as are 2020 RMDs.
  • The 10% penalty on early distributions of up to $100,000 from either IRAs or company retirement plans is waived.
  • The maximum amount of money that may be borrowed from a retirement plan is increased from $50,000 to $100,000, and loan repayments may be suspended for as long as one year.

These IRA provisions can provide relief in the area of health insurance plans as well, as Jeffrey Levine explains in a second Financial Planning Magazine piece. While “it is generally best to reserve amounts in retirement accounts for their intended purpose,“ Levine suggests that for clients with cash flow problems who need to pay medical bills and lack the ability to fund their Health Savings Accounts, there is a once-in-a-lifetime option to move money directly from an IRA to an HSA. In other words, with the early distribution penalty waived on the IRA withdrawal, clients can fund their 2020 HSAs.

For small business owners, CARES offers relief, too, points out:
Employers can defer payment of the employer share of the Social Security payroll tax, extending payment on those taxes over the following two years.

All these CARES Act provisions impact our estate planning clients at Geyer Law, offering new opportunities for family transfer of wealth, special needs planning and revised business planning. Needless to say, the same COVID-19 emergency that gave birth to these new provisions necessitates meeting our clients’ needs through videoconferencing, navigating together through these highly unusual circumstances .

– by Ronnie of the Rebecca W. Geyer blog team