How the CARES Act and SECURE Act Affect your Finances

By Kelly Buchfink

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The year 2020 has been a wild one, not only the because of the pandemic, but also its significant effect on the economy. Two noteworthy acts are in effect that impact the finances of many individuals. Whether you have an IRA or only your 401(k) at Lockheed Martin, the acts most likely affect you, your loved one, your children, or someone you know in some manner.

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CARES Act

Required minimum distributions are not required for 2020.
Required minimum distributions taken after February 1, 2020, can be put back into an IRA by July 15th, 2020.
You can withdraw up to $100,000 can before age 59 ½ without the 10% penalty if you or your spouse were directly affected by COVID-19.
Charitable contribution AGI limit for cash is 100% of adjusted gross income. Before, the largest amount of cash you could donate to a charity was up to 60% of your AGI.
Unemployment insurance provisions now include an extra $600 per week payment to each recipient for up to four months.
Individuals will receive a direct payment of $1,200 ($2,400 for joint taxpayers). Additionally, taxpayers with children will receive a flat $500 for each child. There are AGI phaseouts beginning at $75,000 for single taxpayers and $150,000 for joint taxpayers. Therefore, high earners won’t receive this payment.

SECURE Act

The 10% early withdrawal penalty from a retirement account is waived for up to $5,000 used for birth or adoption.
Part-time employees may be eligible for 401(k) participation.
401(k) statements are now required to show estimated lifetime income.
Most non-spousal beneficiaries of an IRA (Roth IRAs included) must exhaust the account within ten years. Some beneficiary exceptions that may deplete the inheritance over a longer period of time than ten years include:
- Surviving spouse
- Chronically ill
- Minor child
- Disabled person
- Person who is no more than 10 years younger than the participant
RMDs must begin at age 72 instead of 70 ½. This new rule doesn’t apply if you already turned 70 ½ before 2020.
Contributions to an IRA can be made at any age, provided the individual has earned income.

This post touched on some of main highlights of each act. You can find more in-depth information by clicking: CARES Act and Secure Act. Stay safe and be sure to take full advantage of these acts if the provisions benefit you. Please contact us for further details about how your specific situation may be affected. Happy investing!

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Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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