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Educational Resources

By Jeffrey R. Wolfe, Senior Vice President, Manager of Wealth Planning Strategies

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With the COVID- 19 pandemic there are a lot of changes in the world.  Wearing masks in public, maintaining social distancing guidelines, etc. – it can be a lot.  With all these changes, you may be overlooking a few key financial issues that could cost you in the long run.  Here are some things to consider:

  • FSA Contributions – If you make Flexible Spending Account contributions for things like child care, you may want to review those withholdings to make sure you aren’t saving too much. With most child care cancelled, it might be wise to reduce your FSA withholdings to make sure you keep your money.  Remember, the FSA program is an annual “use it or lose it” contribution.
  • Looking for your stimulus payment? Check your IRA – If you have used tax refunds in the past to automatically make contributions to an IRA account, the $1,200 stimulus payments are using the same direct deposit information from your most recently filed income tax return.  If you want this IRA contribution, there is no need to make changes.  However, if you want the entire stimulus payment, or if you’re afraid you may not have enough earned income to make an IRA contribution this year, you need to review your direct deposit information on the IRS Get My Payment  If your IRA is getting a contribution, you will need to seek the assistance of your tax or financial advisor to refund the contribution.  The IRS will not allow you to change your direct deposit information for this payment.
  • IRA Required Minimum Distributions (RMDs) unnecessary for 2020 – Also related to your IRA, if you are currently required to take RMDs from your IRA, those distributions have been suspended for tax year 2020. So, if you do not need to take a distribution from your IRA for living expenses, you can leave those funds in the account to continue to grow tax deferred.  If you already took your RMD, you may be able to roll it back in to your IRA.  Typically, the rollover must be completed within 60 days of the distribution.  However, recently-announced tax extensions will allow rollovers to be completed by July 15 if they were otherwise due between April 1 and July 15.  Keep in mind you can only roll over one IRA distribution in a 12-month period.
  • College refunds may be able to be redeposited into a 529 Plan – Many colleges and universities have been issuing refunds for spring 2020 semester expenses. If you are receiving a refund and may have used 529 plan money for those costs, you might be able to redeposit those funds.  For more, see this recent blog by Theresa Fry.
  • Scammers are looking to take advantage of COVID programs – The IRS has reported that scammers are calling or emailing taxpayers and impersonating the IRS to gain direct deposit information, social security numbers, or even to get taxpayers to sign their checks over to the scammers. The IRS stresses that it will not call or email a taxpayer with regards to COVID-19 payments (or any other issue for that matter).  The IRS generally initiates all contact with taxpayers via mail.  Be sure to keep your personal information protected and don’t share any information over the phone or email with regards to COVID stimulus payments.

These are just a few things to be on the lookout for with your personal finances as they relate to the COVID-19 pandemic.  If you have questions, or if you would like to discuss your particular situation, contact your Benjamin F. Edwards financial advisor for more information.

DISCLAIMER

The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. Benjamin F. Edwards & Co. does not provide tax advice, therefore it is also important to consult with your tax professional for additional guidance tailored to your specific situation.

April 28, 2020 |