Coronavirus Stimulus Bill
When we build a financial plan for Kellett Schaffner clients, we recommend an emergency fund. The emergency fund helps pay for unexpected expenses that arise in the course of daily life. The unexpected expense might be a water heater that fails, a roof leak that results in a significant repair expense or even a temporary reduction in earnings. The past couple of weeks have ushered in an unprecedented era when the US economy is on hold due to the coronavirus. Because of the widespread slowdown, Congress acted to help those whose emergency fund might be quickly depleted or need a boost.
On Friday, Congress passed a stimulus package aimed at easing the financial challenges caused by the coronavirus. There are a couple provisions which make it easier to tap retirement savings:
The bill provides the ability to take a hardship withdrawal from 401k, 403b, and IRA accounts. Up to $100,000 can be withdrawn and no 10% penalty will be applied for those younger than 59 ½. As long as the amount is repaid over 3 years, the account holder will not pay income taxes.
The bill also provides the ability to increase the size of a 401k loan from the usual $50,000 to $100,000.
While these are great options provided by the stimulus package, it’s worth noting there are numerous opportunities to defer usual payments that might help you avoid needing to tap into your retirement savings. Here are a few examples:
Student loan payments are suspended for 60 days.
Credit card companies are working with borrowers to lower interest rates.
FHA-insured mortgages are currently on a 60-day foreclosure and eviction freeze. Homeowners that don’t have an FHA mortgage but need assistance can ask their lender for forbearance.
If you have any questions about how the coronavirus bill might help you or if you would like to talk with us about a financial plan, please feel free to give us a call or drop us an email.
Brian Kellett. Email brian@kellttschaffner.com, Cell Phone 513-312-6067
Jared Kline. Email jared@kellettschaffner.com, Cell Phone 513-768-2238
Nick Gemmel. Email nick@kellettschaffner.com
Carrie Martin. Email carrie@kellettschaffner.com