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Coronavirus IRA Relief

Finishing Well / Hans Scheil
The Truth Network Radio
May 23, 2020 8:30 am

Coronavirus IRA Relief

Finishing Well / Hans Scheil

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May 23, 2020 8:30 am

The government has given you some help with your IRA. Not only are you allowed to take some money out without penalty if you have been financially hurt by Coronavirus, but you can also leave money in your IRA for longer without penalty. Hans walks through who these new provisions might work well for and who might want to not take advantage of this relief. Remember, Cardinal and Hans are here to help anyone who needs it at this time!  

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at  


You're listening to the Truth Network and Welcome to finishing well brought to you by Cardinal guy Certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well so today on finishing well, a certified financial planner on file with the timely show which is Corona IRA relief is obviously some wild stuff is changed as a matter of these policies but if you thought about this for you heard it from your pastor, perhaps, but Corona is actually Spanish for crown. Probably Latin as well.

Certainly some version of that French but nonetheless crown is you know certainly when we think of Christ Tribridge Christ crown and so you know the crown relief makes perfect sense to me in that you know if you really trust in the crown. Which of the crown of Christ, then you have no need to fear and II think it was Roosevelt who said you have nothing to fear but fear itself and we seen that in these times that all my goodness, the people that you know were rampant with fear were the people that needed relief and so I got an idea for you when you think Corona.

Think of the crown of Christ and that we got there is no need to fear you know Jesus is here and it's all to be good, but in the meantime, you know, the government has found some things that they felt like they can help in tax relief and everything through IRAs and so we are very blessed to not only have a certified financial planner on showers to go through those things, but your fresh off the head slot is liked IRA guru of groomers sure and see have the latest and greatest head slot is is America's IRA expert CPA New York most people out of our industry haven't heard him. He's on public TV. He donates his time to public TV in the use him to raise money just giving IRA advice and how I know him, is he has a group called his elite advisors. He started at about 20 years ago. I've been in about 10 and he you have to take an exam to get into this thing go to a conference, and, of course. Slot dues money but is wonderful. We go to conferences a year. This year it was a virtual conference serviceable tough to go over tax stuff just on the computer with all the glitz and the speakers and all I can stuff but I made it through it and what he does. He just is a group of people that we benefit from his research and his know-how in this, one of the seven worries, which is IRAs and 401(k)s, retirement plans, and the tax planning around and really the financial plan so I'm on the telephone among the web doing webinars reading monthly with head slot and then I go twice a year to his seminars, which I'm required to attend. Being a member and then we get very deep into IRA plans and really forget the nuts of it, which were just trying to get the money out of the IRA and pay the least amount of taxes if you really want to get out of the goal of the thing, because with IRA money and 401(k) money clutter things we cover and specifically on today's show Congress just passed the cares act, which is Corona virus a relief, and economic security act so they must have like a little room for a little room of capital somewhere in these people, his whole career they got MBAs in their wordsmith people and they come up with ways to describe the law and then have an acronym that sounds good. Okay now that's the cares act in the cares act covers a whole lot of things that were not can talk about the show is really designed to stimulate the economy. The specific ones were going to talk about today is how this affects your IRA and 401(k) or any type of retirement and is kind of interesting that the two things that they've done to IRAs seem exactly the opposite of each other and salami qualified. So if you're if you're still working or you're young you're not yet retired and you've lost your job or you suffered some economic circumstances, your pay is been cut way down and you've been damaged and you're just out of money. You got a financial problem because of the coronavirus thing going on and you have money in an IRA or 401(k).

There's provisions of this law that you can get it some of that money just to live to replace your missing income to get another job and you can do that and you can avoid, and postpone some of the taxes. So that's the first thing I want to talk about when the shows really about retirement, so some of you that are planning for retirement.

You're still working on this may be an option for you.

Many of you have adult children who are in circumstances like this and this would be a possible place for them to withdraw some money and have some liquidity's pay the bills and to make it to the next job. So for that reason, you know, I don't really want to get into the politics of this at all or not can get into the politics I just really want to talk about. So what does the law let you do and maybe why would you want to do this or why would you not want to do it and then you know I would suggest that if you do pull some money out or when your kids does or somebody or advising that they would seek the help of a professional that they wouldn't just say no I heard on so you can pull money out of your IRA in and disbanded to live in. You won't have to pay taxes on, you know, I didn't say that and don't have somebody just relying on hearsay. To make important financial decisions. All that being said is there's really four criteria that you you you.

This person that would make this withdrawal.

Whether that would be you were somebody you know they would need to experience adverse financial consequences from either one being quarantine number two being furloughed or laid off or having work hours reduced being unable to work due to lack of child care or closing or reducing hours of a business owned or operated by the individual. So if you need any one of those four criteria you're eligible for this and nearest I can read, there's no matching of like how much money you lost, and then you can only withdraw certain amount, there's none of that matching is if you meet one of those criteria, which is pretty much everybody in the country and you have money in a plan and a retirement plan like a 401(k), 403B or an IRA you can make a withdrawal of up to $100,000 this year. Get some dates that that needs to be smashed into bridge 20 a lead time to do it now from when you're here in this radio show you can withdraw $200,000 and you can avoid if you're under 59 1/2, you'll know that there's a 10% penalty for early withdrawal from retirement plans or IRAs that's waived. So you won't ever have to pay that and so if you were even thinking about taking money out of your IRA is like if you were planning to do that a year from now, after you ran out of your other savings you may want to time.

This is what happens this year because you can avoid the 10% penalty on a per hundred grams and then as far as the taxes you are still going to have to pay taxes on this money withdraw if you withdrew the whole hundred thousand euros that's going to be a tax bill 30th $45,000. The government can give you up to three years to pay the taxes so you pay one third of this year, another third next year and another third year after that. So exactly how they can spread that on your tax return. We haven't gotten that far yet, but that's a benefit to it and then it you know you have up to three years you can actually put this money back.

I don't know how many people are going out be out of a job, withdraw the money spend the money to live still keep enough to pay the taxes and pay the taxes next year and then somehow magically in the third year they're going to have this amount of money show up in there to pay back but if somehow you could make that work for you could get a loan from the bank or you inherit some money or maybe when your parents would give you an early inheritance or something. Maybe you win the lottery I don't know you would be able to put this money back in the IRA. When you do that you get the taxes back so that's kind of it in a nutshell in this, blabbering it, but it's some those of the general rules and so if we try to make that a practical meal. Just say my son is in the car business and you certainly say that. Oh my goodness he's seen a reduction in sales and always it is a is people not coming out like they were in all that and so and he's got a big RRA and he's used to making in a certain amount of income he could write take no IV pump 200,000 depicted number, like 20 probably more realistically, but just $20,000 now eat eat. He takes it out. Now he's probably in a pay taxes and of $70,000 right would be legitimate what the taxes are to be the good news is he didn't have to pay that back but over three years. He didn't have to pay the taxes over three years, but just keep in mind, let's just say he pays sets aside 2000 of the 6000 doing taxes. She sets aside one third this year that he's going to have to come up with a $2000 next year and 2000 a year after that if is Artie spent the 20 grand for the leftover amount of that he could be in a little bit of the line next year and a better danger Will Robinson yeah but but if you can assume things are to be better next year than just having to pay back but if you get stored in heat did take that 2000 out in the heat left $4000 in an account somewhere now At the taxes over there and then maybe I know he has a really good year and in 2023, 22, whatever it is and bow me could put the money back and now he gets it.

Six ran back for for having done all that, so that you know there's a possible no backend stimulus not only make this sound to pretty mean reality is, you probably shouldn't do this okay, and without even saying that if you do do this or consider doing your cheery bunch of shaman we should be robbing our retirement accounts. Now, the flipside of that is, the government did this for a reason is if you're out of money and out of a job and you got money in that 401(k) or IRA or something there that's going to help you keep your family together and fed and under the roof. I would say go into we come back we got more I think we just talked about one half of this boomerang effect of the you know IRA relief that were talked about the Corona crown. So we come back. Remember, as always, is about two by Cardinal and complete the Cardinal died planning for limited time at home Available just by email and we come back more Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group.

Here's a chance for you to advance the kingdom through financial resources and leveraging Hahn's expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care. Just go to Cardinal and contact Tom to schedule a live recording of finishing well at your church Christian or civic group contact on the Cardinal that's Cardinal welcome back to finishing well with today's show Corona IRA relief which is a fascinating subject were here with our financial planner, certified financial planner Hans Gile and Hans only left her hero get out of money.

You know it's interesting out of this IRA here on the front of the young people I have not taken money out of their inheritance and looking at what that may look like a knight. I do think it's advised that there's some way not to do that or even be able to take a loan against it. There's not there's there's other things and there's some relief provisions for loans in here as well whole bunch of stuff they did in here I was just trying to get to the essence as you can. Rob your IRA if it's your point last resort to be able to pay the bills okay and I want to just throw in there. In summary, is I want you to lose the shame about his if that's where you need to go and you need to get money to live than just was due. Try to figure out a way to put back right right at that time for young adult yeah and I don't necessarily want to call a lot of our listeners old on myself at two, let's just say they're the people that are 70 and over and they can call themselves what they want that have to take what are called required minimum distributions in there and get some relief from those if you really want to call it relief. So with the government has done is really just seems like the opposite of what they've done for the younger people that let the younger people pull money out and limit the penalties there let you leave it in.

If you're over 70 so you there's gonna be no minimum distributions are required minimum distributions in 2020. So you can still take the money and you can still pay taxes on just like you. As you can take more than the money and pay taxes on that so nobody is telling you you can't take money out of their just saying you don't have to take money according to the law and it also applies to some people younger than 70. If you're an inherited IRA beneficiary.

So if you're somebody who has received event that you are the beneficiary of an IRA and so you have an inherited IRA and you're stretching the payments out over your lifetime you are relieved as well from the 2020 minimum distribution and so I think part of that was in this Corona was relief. Bill is there saying that look anybody does invest in stocks is loss and substantial money in the stock market and so there just giving you some relief in the sense that your counts, not a medical have to go lower because you can make a distribution now. My sense is that in those you that listen to the show regularly know that I'm not necessarily a big fan of just taken the minimum okay and I and for that reason is is it it just doesn't make a lot of sense to use an IRA as a wealth transfer vehicle because your hand in over a big tax bill to your kids so if you choose not to take your minimum distribution or any distribution in 2020. You really this is gonna make your IRA that much bigger save the taxes you save the spent money or whatever so that looks good on the surface, but ultimately if you don't withdraw the money during your lifetime is going to pass to your kids in people inherit a lot of these in your 40s, 50s and 60s and they need the money in the a lot of times it is going to pay the tax and collect the money and so you get a lifetime of savings get wiped out in a year or 40% of the pie tax bill and the other 60% of it by perhaps him spending on things all at once, so I I don't see and I don't see that it were necessarily accomplishing that much by not taking money out of the IRA. I think your and a lot of people that are doing that are really trying to save that thing for their kids and there's a lot of better strategies than just letting it build up in the taxable account right as we talked about numerous shows that the lower tax rates that were currently enjoying which will last forever is a great time to even take that money if you want to keep it in IRA, you can take and transfer to a Roth IRA that within give you a lot more options. Another option is just pulling out money now paying the taxes and given it to your kids. Now after the taxes in and if you if you truly don't have it there for yourself as it is a cushion now and I can just blanket recommend that for anybody.

You could you could pull it out, pay the taxes and then take what's left in invest that and something were you then would have access to money where you would have to pay taxes when you make a withdrawal and the people use their IRA as her savings account. They got a big problem because if they build up tens of thousands and then hundreds of thousands of dollars and they all this and that's her savings account.

All the sin they needed $50,000 for something Juergen have to draw out 80 or 92 net 50 because you can have to pay tax on every dollar come there and that's gonna send your tax bracket off the roof so systematically pulling out money year after year after year out of an IRA just makes sense, possibly more than the minimum I can't tell you that without really looking at your situation and doing a plan for you but when I'm what I am recommending is is that you firm for many of you that you would seriously consider still taking a distribution this year.

If you truly don't need it. You could do a few CDL qualified charitable distribution so that would be another thing you can call me about is you could give the money directly to the church and then you would pay taxes on or another charitable institution. Great point that for a lot of folks right. They've lost a lot of money in the stock market in a one quarter and and and so they're looking at something doing all this would be a good time to take them against what they feel is like I'm in are not where I was. I'm not where I was, but by the same token, those losses don't they offset some things as far as look at your taxes this year. If you're not if there inside an IRA meet because you know that this is taken example to see $100,000 in your IRA. On December 31, and then maybe a girl bit in January so I grew up 205,000 or something in January and February and then it crashed in the market because you have it all in stocks and growth stocks and then it went down to 80 will none of those things created a taxable event you've never paid taxes on this money so there's no tax write off. But to say we had protestant B effort that's been number two had money and a and a Roth IRA that was also in the stock market right with his bosses be a taxable event.

No doubt, because as tax-free F tax free to okay play since he had just plain money.

MER is know which you're thinking about is if you own stock when in an IRA right and then it went way down in value and you sold that you that is how I didn't realize long didn't realize law and you have to sell it for less than you originally bought it forces a lot of people crying over there losses in the market and the crash that happened back in March and I'm still one of them is still in use that money but a lot of them don't really haven't looked at that what they lost were gains that the money in the stock markets run up a lot over the last few years with a they've really lost money against their all-time high, but they're still in the zone of making money I paid cash that they would have a tax, they brought a little capital gains taxes while you know over what they paid for. So can I get into an area of taxation and that's one of the things it makes an IRA so nice is you can move stocks around you can suffer losses and you can get gains and you don't have any taxable taxable. You don't have taxes on traditional IRA with not a rock until you make a distribution and that's with the government is giving you relief from there saying you don't have to make distributions you otherwise would fall under the minimum distribution rules were to waive that for 2020 okay gather for the first time the session begins to turn the light on why that might be a really good thing for some seniors because those people who did have their money in stocks that took significant losses that might be on the way back up as the market yeah covers by not having to take a distribution element to sell the stock correct to pay the taxes and and you know it is just make the distribution right to make their RMD then left several stocks and so they will take the loss. Yet what which which I can see that but by the same token, a long-term plan would be saying we gotta get this money moved into someplace where we are little bit by little bit and then you know we haven't even talked about the people that are pretty much in a low tax situation and most of their savings in an IRA. They never paid taxes on that the a pretty good Social Security check, maybe a little of a check from something else and they're just marginal line and not paying much in taxes and then they really think they're beaten something by skipping the minimum distribution or just taken the minimum and then their kids who are doing well. Who are the beneficiaries of this IRA there in high tax brackets.

So these people are going to just hoard this money it's going to grow in the gonna die, leave it to their kids and their kids. You can cash it in a really high tax brackets and do it all in one year. That's provided they have their beneficiaries right which is to be a good time to mention that yeah I mean we always Ed Sanchez talked about again.

He goes over it in every meeting and we talk about it on a lot of radio shows people check your beneficiaries. This money is not capacitor the will. I don't care what you will says that when you die, the beneficiaries can be paid and make sure that that's who you want money to go to and I'll be glad to help you with that is simple to change beneficiary or to update and we just put in as a point of that's on your if your home and you can't get out your looking for some to do that be a great thing to put on the list.

Look at those beneficiaries again. We been talking about Corona IRA relief today on finishing well, a certified financial planner and author, I point out that of the complete cardinal guide to planning for living in retirement which the books available right there cardinal actually seven worries tapping a PDF free download right from the website. Just email Hans with your technical slightly glad to send the book out to you. Anybody that's interested in it. Just going cardinal going on the message McKenzie's my assistant put down the that you'd like a book and make a comment or two about the show and ship points give us your address and will send one right out to find songs for all you do on the IRA stuff is thank you, thank you for this. We hope you enjoyed finishing well brought you by cardinal visit cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as ponds best-selling book, the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows when you get Hans book go to cardinal if you have a question, comment or suggestion for future shows.

Click on the finishing well radio show on the website and send us a word. Once again, that's cardinal cardinal

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