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During these unprecedented times, there are several temporary changes that can affect you financially. In addition, the pandemic has highlighted for many of you the importance of being adequately insured and to make sure your estate plans are in place. We can never know when we will pass, but we do know it will happen at some point. The best time to do estate planning is now.
General
Breaking: Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act was signed into law on 3/27/2020
Highlights:
- Ability to withdraw up to $100,000 from IRAs before age 59.5 without penalty and tax-free IF you re-contribute it within 3 years. If you do not pay it back within 3 years you will owe income taxes only and no 10% penalty.
- Ability to take up to $100K loan from your 401(k), previous limit was $50K. It looks like you can defer repayments until 2021.
- Suspension of RMDs (Required Minimum Distributions) for 2020
- Student Loan relief for federal loans (see below)
- Cash checks for qualifying individuals/families (most attending physicians will not qualify based on income). This phases out between $75,000 and $99,000 ($150,000 and $198,000 married) in adjusted gross income.
- Increased unemployment benefits, including self-employed & contractors
Taxes
Now updated to include CARES Act that passed on 3/27/2020
The federal deadline for filing, making estimated payments, and extension payments is now 7/15/20 (from 4/15/20).
$300 above the line deduction for charity, even if you not itemize. This is for 2020 only.
Roth IRA contributions are also extended until 7/15/20. It also looks like this includes HSA contributions.
There are other provisions that are unlikely to affect most of my readers (real estate investor benefits, etc).
States are slowly deciding if they will extend their deadline or not, so be sure to check in with your respective state(s).
Insurances
Life Insurance
No changes for obtaining term life insurance except that some companies are waiving some or all of the physical exam and laboratory requirements depending on your application.
I’ve gotten questions from readers about whether the pandemic will affect term life insurance payouts. The answer is probably not. This is due to two major factors – the majority of the deaths will be older adults who no longer carry term life insurance and because most people are not insured.
Disability Insurance
Principal is currently waiving physical and laboratory exams for policies up to $10,000 (attendings only).
Guardian is also waiving physical and laboratory exams for those age 45 and younger.
Regardless, if you’re reading this and do not have your own-occupation disability policy, now is the time to obtain it. Here is a primer on disability insurance.
My recommended agents are:
Lawrence Keller of Physician Financial Services – (516) 677-6211
And
Stephanie Pearson, MD of Pearson Ravitz – (610) 658-3251
Estate Planning
Estate planning is top of mind for many folks. Here are some resources to guide you:
In Case of Emergency binder is 40% off right now.
What is this? Would your spouse and loved ones know what to do when you pass? Do they know how to access your accounts and other important documents? That’s why you need a legacy binder. Death planning is, unfortunately, the high priority item that rarely gets done before your loved ones need it. It’s probably due to a combination of thinking you will have plenty of time to get to it and avoiding thinking about your demise.
Here is a blog post on the basics of estate planning.
I’ve partnered with Anderson Advisors for estate planning, specifically with creating a living trust. As a special bonus to my readers you will get free unlimited amendments to your trust.
Student Loans
Certain federal loans will have some reprieve, specifically:
- Direct Student Loans (Direct Stafford Subsidized, Direct Stafford Unsubsidized, Direct Grad PLUS, Direct Parent PLUS, Federally Held FFEL, Federally Held Perkins)
- FFEL if federally held
- Perkins Loans if federally held
- 6 months suspension of loan payments and NO interest through September 30, 2020
- These 6 months still count towards PSLF and other Income Driven Forgiveness programs
If you're pursuing PSLF – basically do nothing, payments will automatically stop (supposedly). If you're not but still have federal loans that qualify…then sit tight and DO NOT refinance privately…take advantage of 0% interest! This is a good source of extra cash right now.
No reprieve for those with private loans but rates are low now, so if it's been a while since you refinances, it's not a bad idea to see if you can get a lower rate. Get an additional 0.25% off when you refinance with SoFi and check out the other bonuses I have negotiated for you here.
On March 20, 2020, it was announced that student loan payments (for certain federal loans only) can be suspended for 60 days. You must contact your student loan servicer to put your loans into a 60-day forbearance with no payments as this is not done automatically.
Interest on federal loans are waived for 60 days as well.
There is no change for privately held student loans (most refinanced loans). However, with all loans you can apply for forbearance if you need to.
In proposal: The Student Debt Relief Act, would cancel $30,000 in student debt for borrowers. The forgiveness would also be tax-free, meaning it would not be taxed as income. For those who owe more than $30,000, the government would assume their monthly payments. Additionally, all efforts by the Department of Education to collect debts would be suspended.
Mortgage Refinancing
Rates are not going down and many lenders are experiencing bottle-necks due to increased demand and COVID-19.
It’s not a bad idea to take out a HELOC if you’re qualified, to have cash on hand.
Small Businesses
Here is a resource for those of you with small businesses (private practices included) detailing the recent changes to help you: https://gusto.com/blog/business-finance/coronavirus-relief-resources
Please contact me if anything is incorrect or if I should add anything to this page.
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