Life has already changed under COVID-19 in big and small ways. Think about the restaurants and retail stores that have adapted to accommodate online orders and curbside pickups. Think about shoppers and clerks wearing masks at the grocery store. Think about the number of businesses that have converted to a work-from-home model in recent months.
While the long-term impact of the pandemic is unknown, I feel one thing for certain: Those who adapt and evolve will emerge with a brighter outlook on whatever is next.
I recently had a conversation with a friend who shared a helpful analogy about what we’re facing. She said that we’re all in the same ocean but in different boats. You might be on a yacht with all the amenities, and you’ve been inconvenienced. You might be on an innertube, barely keeping afloat. You might be somewhere in between.
How are you feeling about your financial picture as you navigate these waters? The pandemic is an event that’s putting many through a transition in life. Your boat isn’t floating as you would like it to. COVID-19 might have put you under financial duress.
Most recently between the Secure Act and the Cares Act, there are many savers and retirees that are dealing with several changes and wondering how all the rules apply to their situation. Three major areas to explore are:
- Changes to Required Minimum Distributions (RMDs) in 2020: The CARES Act, passed earlier this year, delayed RMDs in 2020, which means retirees can leave their retirement accounts alone for another year.
- Tax-loss harvesting: When using this strategy, investors sell low-performing, taxable investments and use the loss(es) to offset gains, which can lower their taxable earnings.
- Roth conversions: To use this strategy, investors withdraw money from their pre-taxed retirement account, pay the taxes on that amount in the current year, and then redirect those funds into a Roth IRA. People often take advantage of Roth conversions in low tax years, which can happen in a down market.
If you qualify for RMDs, should you be taking them in 2020? Have you looked at the option of tax-loss harvesting with your portfolio? Is a Roth Conversion something you should be discussing now?
Most people want to know what makes the most sense for them. Maybe you aren’t getting the advice you need during this time of uncertainty. Maybe you want to take another look at your financial plan to make sure you’re on the right path. Maybe you want a second opinion, so you can decide whether you need to make adjustments. Or maybe you recognize that now is the time to start working with a professional.
I have a passion for helping people through life transitions. I understand what you’re going through as we all grapple with COVID-19 fallout and new legislation. I’m happy to offer objective guidance that can help you make rational decisions while you’re in this time of uncertainty.
Transitions can have a significant impact on your future. Life won’t be the same post-pandemic. Have you planned for what’s next for you and your family?
Contact me today to schedule a comprehensive review of your financial plan.
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For a comprehensive review of your personal situation, always consult with a tax or legal advisor. CWM, LLC, any other named entity or any of their representatives may not give legal or tax advice.
Converting from a traditional IRA to a Roth IRA is a taxable event.