The Coronavirus, Aid, Relief and Economic Security (CARES) Act was signed into law on March 27, 2020 in response to the global COVID-19 pandemic. The Act will allocate more than $2 trillion to individuals and businesses, as well as make several changes to retirement accounts and health savings accounts.
Those changes include coronavirus-related distributions, changes to health savings accounts, and IRA contributions. Here are three items to note:
- First, the coronavirus-related distribution changes for 2020 involve the 10% early withdrawal penalty. The penalty has been waived for 2020 and is retroactive back to January 1, 2020.
- Secondly, Required Minimum Distributions (RMD) have been suspended for 2020.
- Lastly, you can take up to $100,000 in a penalty-free distribution and pay the taxes over a three-year period or recontribute those funds over a three-year period.
When it comes to health savings accounts (HSA), over-the-counter products were reinstated as qualified purchases. Menstrual products can now be purchased with HSA dollars as well. Also, for calendar years 2020 and 2021, telehealth expenses can be covered with HSA dollars even if the deductible has not been met.
On a final note, since the IRS delayed tax filing from April 15 to July 15, you can now contribute to Roth and Traditional IRAs for 2019 until July 15, 2020.
If you have questions, please reach out to the financial consultants at Park Capital Management.
Park Capital Management, LLC, a SEC Registered Investment Advisor. The investment products and services offered by PCM are independent of the products and services offered by The Park Bank and are not FDIC insured, may lose value, are not bank guaranteed, and are not insured by any federal or state government agency. Park Capital Management, LLC (“PCM”) is affiliated with The Park Bank.
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