Market Volatility Update: Financial Actions to Take While You’re Home

Chatterton & Associates Kyle P. Schneider - ChFC®, CFP® gave an update this past week on the recently passed stimulus package, known as the CARES Act, as well as a review of a few points on the SECURE Act. He also gives some key recommendations on the financial areas you can review while at home.

What you need to know about The CARES Act

In this 540-page document, there is quite a bit of information. But we’ve pulled out three facts that may be useful to you.

Required Minimum Distributions

All RMDs have been waived for the year – this will allow for more advanced planning regarding distributions, taxes, and Roth conversions You may remember that under the SECURE Act, there was an age increase from 70 ½ to 72 of those who were required to make withdrawals. 

Charitable deductions

There is now a $300 “above the line” charitable deduction. If you take a standard deduction, that means you can take an additional $300 for charitable contributions. 

Recovery rebates

Though there are some exceptions, most single taxpayers making $75,000 or less, will get a stimulus check of $1,200. Likewise if you’re married, filing jointly, and making less than $150,000, you will receive $2,400. The bill has phase out points at $99,000 for single filers with no dependents and $198,000 for married couples with no dependents.

Tax deadlines

The tax deadline has been extended from April 15, 2020 to July 15, 2020. 

How does this affect my IRA or Roth IRA contribution?

The IRS has stated that it is okay to make contributions to your IRA accounts up to July 15, 2020. However, some are questioning the legality of that and wondering whether that statement will be reversed back to April 15. If you have any questions or want to make contributions, we recommend talking to your financial advisor regarding your personal situation.

IRA reminder under the SECURE Act

As a reminder, there is now no age limit for IRA or Roth contributions. However, for those who inherit a qualified plan such as an IRA or 401k beginning in 2020, there is now a 10-year cap on distributions, which can affect beneficiaries, trusts, and other strategies.

Review your estate plan

This is a great time to spend an hour or two reviewing your estate plan. Here are a few tips:

• Sit down with your spouse, and review these documents to make sure that you are on the same page.
• Connect with your successor trustees over video software to make sure that nothing has changed.
• Ask yourself if the beneficiaries are correct.
• Do you need to add anyone? Are there any other changes that have taken place?
• You should also review your healthcare and durable powers of attorney during this time.

Make a list of your digital assets and access

While you are reviewing your succession plan, you may want to use this time to update your digital assets and access. If you have bills or accounts that are on auto-pay, now is the time to make sure that all of that information is correct. Please make sure that your spouse or your successors have access to those accounts, your email, and your phone including passwords. It is critical that everything is organized - if you wish, you can use a service like Everplans to help (this is a service we provide for free to our clients). Doing this now allows you and your loved ones to save time and frustration down the line.

Review your investment strategies

We are always available to answer any questions you may have regarding your current investment strategies, from IRA conversions to tax loss harvesting strategies. Please reach out to your financial advisors on the Chatterton team to review any of your investments. We also invite you to check out our resources page, which covers frequently asked questions and topics that may be of interest to our clients.

Review your three buckets

A critical piece of information to be reviewing at this time is your short-term, intermediate-term, and long-term needs buckets. Our financial advisors can discuss options with you to ensure you have enough resources to last you in the short-term without having to sell investments that are down right now. Please reach out to review your personal financial situations, and let’s discuss what actions we can take.

How can we help?

We hope that we have addressed your questions and concerns, but as always, please don’t hesitate to reach out and let us know how we can support you. Our team is always available to speak over the phone or through video conferencing. 

Sincerely,

The Team at Chatterton & Associates

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.