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How the coronavirus stimulus package can help retirees and savers

Erin Arvedlund, The Philadelphia Inquirer on

Published in Home and Consumer News

The House gave final passage Friday to a massive $2.2 trillion stimulus package intended to help businesses and workers cope with the economic impacts of the coronavirus pandemic.

But goodies for Americans saving for retirement, and those already retired, are also tucked inside.

"The bill is complex, so check with a tax specialist or accountant before making any big moves," said Mitch Gerstein, a CPA with Isdaner & Co. in Bala Cynwyd, Pa. "But the idea is to put money into people's hands as fast as possible."

Here's what you need to know.

Usually, retirees must take out a minimum lump sum every year from their retirement accounts. It's called the required minimum distribution (RMD), and you pay taxes on that money.

But this year, you don't have to take your RMD under the stimulus law and can avoid paying taxes, too.

 

"Some people already took money out this year," Gerstein said. "And, yes, you can put it back. There is a provision in the bill that you can take money out of an IRA and within 60 days, you can put it back in."

The new legislation makes several changes to policy around retirement savings.

You can wait to contribute money to your retirement plan. On March 24, the IRS issued rules that extended the due date for IRA contributions and plan contributions to July 15 instead of April 15.

In addition, the package waives the 10% tax for withdrawals for amounts up to $100,000 from all retirement plans and IRAs. You can take out the money as a loan, not paying any taxes, on one condition: Any amount you take out must be repaid in three years.

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