The Senate passed the Stimulus Bill last night. Here are a few quick takes.
- The bill will provide a one-time $1,200 payment if you make less than $75k or $2,400 to a married couple making less than $150k. After that it phases out until a $99k income threshold for individuals and $198k for a couple. It also provides $500 for each child.
- The unemployment benefit will be increased by $600/week for 4 months, this is on top of what state programs pay.
- Federal student loan payments will be deferred until September 30th.
- The bill waives RMDs (required minimum distributions) for this year.
- It also waives the 10% penalty on early withdrawals from retirement plans for those who have been affected by coronavirus (Please consider this option as the absolute last resort!!!…see below).
- All testing for COVID-19 will be covered at no cost.
- Provides $350 Billion as aid for small businesses in the form of loans guaranteed by the federal government.
Waiving the 10% penalty may make it seem like a great opportunity to take money out now from your retirement accounts. If you are considering this, please proceed carefully.
The markets have been scary and turbulent. The value of your retirement accounts has taken a huge hit. Understandably, you may feel the urge to do something. If you do, put some time distance between this urge and the action itself. Contemplate whether the decision is emotional, rather than necessary. Of course, unfortunately, some of us may end up needing their retirement funds to survive. It’s only then when you should resort to withdrawing money early from your retirement accounts.
If you need free guidance during this time, please feel free to reach out.