Ep 34: Retirement Account Changes for 2020
The government implemented multiple measures to assist Americans during this health crisis, and there are number of changes that investors and retirees need to know about. Mike is going to run through the key provisions so that you will have a better idea of how your retirement plan will be impacted.
The Reality of the Matter:
We began the year focusing a lot on the SECURE Act because it was the first significant retirement legislation in years, but we’ve shifted some of our attention to the changes that were included as part of the CARES Act.
This coronavirus relief bill is aiming to provide assistance to the millions of Americans that have been impacted by this pandemic, and it will achieve that through a number of different provisions for individuals and small businesses. We’ve touched on the impact of the coronavirus in previous episodes, but now we want to focus on the changes that will impact investors and retirees directly.
You might have read or heard about these in the news but there are three key spots we will get Mike’s opinion on during this show:
•Option to pull money out of a retirement account penalty-free
•Required Minimum Distributions have been waived for 2020
Each of these were put in place to give people flexibility and options to navigate this financial crisis so we want to make sure you understand what is and isn’t allowed. Plus, what do you need to be aware of it you decide to pull money out of your retirement accounts early? And on the RMD side, we are already talking to our clients about what this means for your retirement plan and we’ll share those conversations on the show.
If you think this might be something that can benefit you, make sure you talk with a financial professional to evaluate all of your options and to put a plan in place for how to proceed. Pulling the money out of your retirement accounts early can completely change your financial plan so you want to account for that before making any decision.
Let’s also take a couple listener questions on this episode. The first asks about rental properties and how to repurpose the money after you sell them off. And the second is a great one asking about money for retirement. Many people get an arbitrary amount in their head without ever diving into their finances to determine exactly how much they need to live confidently so we’ll talk about that as well.
1:17 – Are you and clients getting used to the virtual meetings?
2:06 – First thing Mike wants to do when quarantine is over?
4:44 – Give us the details of the changes made to retirement accounts and withdrawals.
7:14 – 401k loans
7:54 – RMDs have been waived for 2020.
8:55 – Mike doesn’t recommend taking money out of retirement accounts.
9:49 – Are clients considering this option right now?
11:11 – Does Mike think these are good changes that will help people?
12:50 – Before you withdrawal any money, make sure you have a plan.
14:40 – Mailbag Question #1: I’m going to sell three rental properties but maybe all five. I have quite a bit of equity in these properties. What should I do with this money?
16:32 – Mailbag Question #2: I retired two years ago with more than a million dollars in my IRA, which I thought was more than enough at the time. It makes me nervous every time I withdrawal money from that account because I don’t want to run out of money. Am I worrying too much?
Thanks for checking out the Retirement Reality Podcast. We’ll talk to you again next week.