Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management.
Announcer:
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker dealer, member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management, are not affiliated. Cambridge does not offer tax advice.
Announcer:
Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning, and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS.
Nate Kreinbrink:
This is Nate, and James joining me today from NelsonCorp Wealth Management. James, I think it’s safe to say this is a first for me doing this show remotely through a call-in today.
James Nelson:
Yes, it’s a little different having a call-in versus walking up the hill to do it in the studio. But we’re going to make it work.
Nate Kreinbrink:
We will make it work. I was talking with the boys this morning how crazy this is waking up and seeing snow on the ground, when last week we had shorts and a t-shirt and was enjoying some 60, 70 degree temperatures. Of course now, in the April in the Midwest, we’ve got snow on the ground.
James Nelson:
Yeah, exactly.
Nate Kreinbrink:
Hopefully, we get to those warmer temperatures later this weekend like they’re calling to it.
James Nelson:
Definitely [crosstalk 00:01:33].
Nate Kreinbrink:
Talking about going into today’s show, I know David Nelson has been on the last couple weeks talking about overall markets, the economy, some of the volatility that we’ve seen recently obviously with the coronavirus and the impact that it has had on the overall economy and the market.
Nate Kreinbrink:
James and I wanted to talk a little bit more specifically today about the CARES Act which recently came into effect to kind of help individuals out, some of the different parts of that act, and how they impact individuals directly.
Nate Kreinbrink:
Before we kind of get into that though, I wanted to definitely make a distinction that this is completely separate from the SECURE Act that was enacted at the beginning of the year. We’ve talked a little bit about some of those changes to the RMD age, to the required minimum distribution, of changing that from age 70 and a half to 72, the ways people take distributions when they inherit retirement accounts, which is totally different than this CARES Act that we are going to talk a little bit about today.
Nate Kreinbrink:
One of those big parts of that I think most people are directly impacted by, it is just the stimulus payments that are going to be either, one, have already hit individuals’ accounts or, two, will be receiving those. Those are the direct payments that individuals are receiving from the government to help during this time for those struggling a little bit with losing jobs, getting their income cut.
Nate Kreinbrink:
So those amount for individuals who make up to $75,000 in 2019 will receive $1,200. The married couples who file a joint return, who make up to $150,000 in 2019, will receive $2,400. Another additional thing that’ll be on top of that is there will be a $500 payment for each child that couples have under the age of 17. So, for instance, a married couple with two children would receive a total of $3,400. That’s $1,200 for each of the individuals, plus the $500 for each of the children. So there’s income limits that come into play here. So if you make above a certain amount, some of those things will start to phase out. But for the most part, those are some of the distinctions that people should be thinking of and looking at as far as the amount that they will be getting.
Nate Kreinbrink:
Those payments will be directly deposited into your account if you have your banking account on file from getting any tax refund directly deposited. Or if you receive Social Security benefits and having them directly deposited, that information the IRS already has, and they will be directly deposited into your account. I’ve talked to some people where they’ve already received those. If you haven’t, you should be looking to receive those over the next week or two. If you do not have that information on file, if you get a tax refund, and you have the check physically mailed to you, there will be a little bit of a delay in when you will receive those, probably sometime in May for them to come into the second round to be able to do that. So again, be looking out for those.
Nate Kreinbrink:
One thing that this does bring into effect though is the potential for scams and frauds. Just please keep in mind that the IRS will not be calling you over the phone to try to get that information from you. If they don’t have it, they will mail it to you. They will not ever call you to do that. I think that’s a big thing right now that people need to be aware of is just the scams and the fraud and everything that’s out there.
James Nelson:
Yeah, no doubt. That goes hand in hand with kind of the next topic is the tax deadline. I mean, we see the amount of fraud that’s taken place in the last several years with filing your taxes and getting your refund. That’s become a big issue. So that’s a good point there, Nate.
James Nelson:
April 15th, which is today, is not the tax deadline. That’s been extended on a federal level, and states followed suit after that. There was some confusion when this was first rolled out, where individuals were told that they need to file an extension to get that July 15th extension, the extra couple months as far as filing your returns. That is not the case. The deadline has just been pushed back for everybody, and states followed suit. So there was about a week there where there was some confusion about that. But individuals do not have to make their final tax payments today. They’ve got a couple more months to do that and get their taxes filed and get everything taken care of.
James Nelson:
The deadline for IRA and Roth IRA contributions have also been pushed back to July 15th. Again, there was a lot of confusion about that. That took a couple weeks for the IRS to give a little clarity there on whether or not that deadline had been extended, and it has. So if you’re still looking to make 2019 contributions, usually today would be the deadline. That’s been pushed back to July 15th for those interested.
James Nelson:
The other thing that I wanted to focus on is what Nate brought up at the beginning, the SECURE Act that was passed at the beginning of this year that bumped the required minimum distribution age back to age 72. We had that goofy rule that said age 70 and a half, depending on when your birthday fell, you had to start taking money out of an IRA or a 401(k) or any qualifying plan. Well, that has been pushed back to age 72.
James Nelson:
Now with the CARES Act that we’re describing here, RMDs do not need to be taken this year. So that required minimum distribution that is supposed to come out of the IRA accounts, 401(k) accounts, whatnot, those do not have to come out this year. So that was one accommodation that the federal government made. If you don’t need the money, they were kind of anticipating markets being a little rocky, trying to give everybody a little bit of a break. If you don’t need the money, the money can stay inside that qualified plan, and you do not have to take that required minimum distribution.
James Nelson:
So that’s, affects a lot of people. A lot of people are living on that distribution in those retirement accounts. But those that have Social Security and maybe a pension and don’t need that money, this is a pretty nice benefit where you get kind of a one-time pass here where you do not have to take your required minimum distribution this year.
Nate Kreinbrink:
Right, and I think those are all very key points. As we all said, I mean with the SECURE Act and some of the changes that that brought in, now all of a sudden we fast forward to March where this CARES Act was kind of put into place and enacted. But understanding some of those things that James just went over and how they can potentially benefit you this year with that required minimum distribution that everyone has to take out. Obviously, any amount that comes out from those tax-deferred accounts is taxable income to you. So it’s a way that individuals can maybe control that tax liability a little bit through some planning to go into that.
Nate Kreinbrink:
I know we’ve kind of just talked a little bit about some of those parts of the CARES Act. It’s obviously a lot more extensive than those two things, but those are the couple of things that I think will have the most direct impact on a lot of individuals. There’s obviously more to it. There’s some parts in there with some changes to unemployment through this year, some additional business support that’s in there. So if you have questions on any of those two things, feel free to give us a call. We’ll be happy to do that on a more individual basis and kind of go over some of those things with you.
Nate Kreinbrink:
But again, it’s crazy times. As we all said, it’s the first time with us doing the call-in show. But a lot of these changes are out there. People hear about them, they don’t necessarily understand exactly how it directly impacts them, if it does impact them. So again, it’s important to know that and being able to utilize and understand some of those things to the best of your knowledge and however it fits you on an individual basis there as James alluded to with some of those points that he made there.
James Nelson:
I would just add too with the required minimum distribution, if individuals are out there and they’re listening and they say, “Hey, mine’s set up automatically,” get ahold of your advisor or the financial institution and put the brakes on that, because a lot of people do have these plans set up where they’re receiving money on a monthly basis or a quarterly basis, and that’s going to satisfy their required minimum distribution. But now knowing this, if this affects anybody, I would get ahold of your advisor, your institution, and put the brakes on that if that’s something you’re interested in.
Nate Kreinbrink:
Right. Again, just to piggyback on that point too, for any individuals who have already taken out their RMD for 2020, there is an ability for you to be able to make that payment back and not have to take it out. So if you do fall into that category as well, be sure to give us a call, and we can help you get that money put back in. Because even though you did take it out, there is still a way that you can actually repay that money and still not have to take that money out as well.
James Nelson:
Yeah, it’s a good point.
Nate Kreinbrink:
Wanted to wrap things up here again, and then just obviously let everyone know we’re thinking about them. Stay healthy. A big shout-out to all of the essential workers that are continuing to do their job and to help us get through this phase. We’re looking forward to getting to the point where we can be back in the office on a regular basis seeing all of our people, getting face to face, having this normalcy, I guess, return. So again, wanted to let that be known out there to everyone. We’re here with you. We’re making it through this, and we will hopefully get there sooner than later.
Nate Kreinbrink:
James, I appreciate you joining me today-
James Nelson:
Absolutely.
Nate Kreinbrink:
… and being here on the show. Again, this is Nate and James with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks again for tuning in, and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport.
Announcer:
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.