COVID-19 and Your Retirement Fund
The rapid spread of COVID-19 and the need for social distancing and self-isolation across the globe has taken a drastic toll on the economy. The stock markets are hitting single-day lows, unemployment rates are hitting all-time highs, and people are left wondering if they will be financially stable by the time this is all over.
The sudden economic shift is causing many retirement accounts to lose value and savings accounts to generate less interest. However, the recent stimulus package approved by lawmakers on March 27th, 2020 includes new regulations that will help support retirees and people who are still investing into their retirement fund.
How is the stimulus package affecting retirement funds?
The new stimulus package includes measures that will allow Americans to withdraw money from tax-deferred accounts, such as a 401(k), during the year of 2020. Investors and retirees of any age will be able to withdraw as much as $100,000 from retirement accounts an early withdrawal penalty.
Taxes on the withdrawal are deferred if the funds are restored into the account within three years of the withdrawal date. If someone is unable to return their funds to their account, they will be provided with a three-year window to pay taxes on the withdrawal.
Furthermore, retirees of the age of 70 or older will not need to pay taxes on distributions for withdrawals from 401(k)s and IRAs in 2020.
Should you withdraw your funds from your retirement account?
Take careful consideration before withdrawing funds from your retirement account, especially during a time when people are prone to panic-fueled decisions.
Withdrawing up to the full amount of $100,000 might help provide some peace of mind at the moment but could draw you off-course of your financial goals. An unwise early withdrawal can put your retirement plans into jeopardy, pushing your retirement back by years. However, it could also provide immediate financial relief during this time. It’s always best to consult your certified financial planner, who can review your comprehensive strategy and determine the best way to navigate these economic changes without sacrificing your long-term goals.
A Certified Financial Planner™ from ProVise can help you manage your retirement funds
Your retirement fund is meant to put your mind at ease for the future, not to be a source of worry and regret. If you’re considering withdrawing from your retirement fund, you should talk to a financial planner about the decision first.
Our CFPs at ProVise Management Group have decades of experience developing and maintaining successful financial strategies for a variety of clients. Our team can assess your current financial circumstances, review your retirement portfolio and measure your risk tolerance to help you make the best decision for your finances during this hard time.
If you’re ready to talk to a certified financial planner about your retirement fund or have other financial questions related to COVID-19, contact ProVise Management Group today.