Let's Get Back To Financial Planning: CARES Act Highlights

Benjamin Haas |

Instead of all the market commentary, which is valuable too, we want to start talking about the serious financial planning opportunities a bear market and the CARES Act present. There’s so much to talk about starting with focusing on the things we CAN control and that directly impact the path you are taking in pursuit of your financial goals.

Here's what's on our minds for you to consider before our next conversation:

  • The tax deadline got kicked to July 15th. Did you file already? If not, don’t just delay. If you’re owed a refund, you can still file now. If you’re going to make IRA contributions, why not do that now, in anticipation of a market rebound? In fact, why not consider forward funding an IRA for 2020 if you know you’ll make a contribution anyway?
  • Roth conversions – Speaking of IRAs, it may make sense to consider converting assets from a taxable IRA to a Roth IRA this year at lower values. There’s some math to consider, but don’t dismiss it before crunching the numbers
  • RMDs are suspended. You don’t have to take a distribution this year if you don’t need to. And if RMDs are suspended, that could be an opportunity for retirees to convert assets to a Roth IRA too, right? Why not consider offsetting the taxes by pairing with charitable gifts (see below)?
  • Everyone now can deduct $300 for charitable gifts in 2020 whether you itemize or not. I'm not going to dismiss this line item in the CARES Act because it seems like a small amount. I know my clients are charitable, and I encourage everyone who is able to give something to someone to do so. We all need to feel good about giving during these difficult times.
  • The 50% AGI charitable deduction limit was removed. This could be a once in lifetime opportunity to "pay it forward" to help a charity or the church in a big way. Or, if 2020 was the year where someone needed to offset certain taxes on the sale of property or business or some other significant windfall, this provision should be discussed.
  • The stimulus that’s coming. [See the link below for details]. It’s so needed for many families. If you or someone you know qualifies and doesn’t need it, talk about where to save/ how to save/how to gift. Forward fund IRA/HSA in anticipation of the market potentially being higher a year from now come 2020 tax time.
  • To the business owners - there are loan provisions and payroll tax flexibility, employee retention incentives, etc. We need to start talking about this ASAP!
  • Refinance - Check to see if refinancing your mortgage with rates so low makes sense.
  • Oil prices – if you have oil heat, take advantage of oil prices being well below where they were before winter and fill the oil tank in preparation for next year.

LPL CARES Act Highlights

More to come on these and other thoughts. It feels like a quickly changing environment. So, while investment allocations are important to address, let’s not forget the fundamental things that have impact on your financial plan as well. There is plenty to discuss!


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA.  The converted amount is generally subject to income taxation.

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