The outbreak of COVID-19 across the globe has impacted the stock market, employment rates, and people’s everyday lives in a huge way. Millions of Americans watched their nest eggs disappear. For those nearing retirement, it is enough to send you into a panic. Thankfully, government officials are proposing changes in law during the coronavirus outbreak to help.
Changes in Law During the Coronavirus to Help People
As the virus swept across the world, the stock market collapsed. Because many retirement accounts rely on investments, people watched their savings for their golden years dwindle down to nothing.
Additionally, individuals who have been laid off during this time no longer have an income to contribute to their retirement. There is good news though. Officials are putting some changes in law into place to help.
1. RMDs Will Be Put on Hold
Required minimum distribution (RMD) refers to the minimum amount an investor must withdraw from their account after reaching age 72. This is common with many 401(k) and IRA plans. If you do not take the minimum, a fine will be placed on your account. However, during the coronavirus outbreak, the government has put a hold on minimum required withdrawals.
This will be the case for the entire year. Ed Slott, a certified public accountant, said: “Now, clients can sit out a year and avoid the tax bill on their 2020 RMDs if they wish.”
2. Penalties Are Being Eased
Individuals with IRAs and 401(k) accounts that have been financially impacted by the virus are also able to withdraw up to $100,000 from their retirement account without penalty. Typically if an accountholder withdraws early, they are required to pay a 10% early withdrawal fee.
It is important to note that this only applies to people who have been diagnosed with the coronavirus, been laid off due to the virus, had reduced work hours, or have otherwise been impacted.
3. You Can Get Larger 401(K) Loans
As mentioned in the point above, people with 401(k) accounts are able to take $100,000 out without a penalty. This is more than the typical $50,000 limit for 401(k) loans.
Other retirement plans will only allow you to take out up to a percentage of your balance. These limits will also be lifted for the rest of 2020.
Other Changes in Law and Policy
Policymakers are also pushing to make other changes to help Americans get through this time financially. For instance, Navient, a major federal student loan lender, has waived all interest and allowed borrowers to be granted forbearance until September. This means no payments will be required during this time.
On top of that, many mortgage companies and other businesses are offering payment relief at this time to assist people through the coronavirus outbreak. If you need assistance or are unable to make a payment at this time, the best thing to do is give the company a call and ask what your options are.
Readers, what do you think about the changes in law during the coronavirus outbreak? Are they helping you in any way?