Stimulus Checks, the CARE Act and Retirement Accounts
Stimulus Checks are Coming
This post is from April 2020, however Stimulus Checks are again in the news in October 2020
One of the most crucial elements of the recently passed CARE Act stimulus plan is the distribution of stimulus checks. Officials hoped to deposit the one-time payments as soon as early April, though Americans likely won’t see the funds until a few weeks later. You can look up your anticipated check amount on this calculator.
How stimulus funds will be received
Stimulus payments will be directly deposited to the account the IRS has on file for a household based on the account to which the last Refund Check was deposited. If there is no account on file, the IRS will send a check to the home address. If you receive a check by mail, it can be safely deposited to your MIT Federal Credit Union account using our remote deposit capture (depositing a check by phone) option on our mobile banking app.
The Care Act and Retirement Accounts (per the NY Times)
The NY Times has a great article that outlines the various aspects of the Care Act. Specific to Retirement accounts they provide the following:
Which retirement account rules are suspended?
For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover. This change would not affect old-fashioned pensions.
What if I have to take money out of my I.R.A. or workplace retirement plan early?
You can withdraw up to $100,000 this year without the usual 10 percent penalty, as long as it’s because of the outbreak.
You will also be able to spread out any income taxes that you owe over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.
This exception applies only to coronavirus-related withdrawals. You qualify if you tested positive, a spouse or dependent did or you experienced a variety of other negative economic consequences related to the pandemic. Employers can allow workers to self-certify that they are qualified to pull money from a workplace retirement account.
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