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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

November/December 2020

Retirement and the COVID Crisis

Retirement and the COVID Crisis

The COVID-19 pandemic has likely affected most retirement plan balances and people’s ability to save monthly. But the hardest hit were retirees or those nearing retirement.


Boomers at Risk
Unfortunately, retirees and older workers have little time to recover portfolio losses. Some nearing retirement may have experienced permanent job loss, forcing them to tap retirement savings, claim Social Security benefits or even retire earlier than planned leading to permanently reduced income.


Generally, most people should try to avoid accessing retirement funds early. However, if you must tap your retirement accounts due to the pandemic the CARES Act included several tax breaks that may be helpful:


  • The CARES Act waives the usual 10% early withdrawal penalty on coronavirus-related distributions taken from IRAs and 401(k)s before age 59 1/2 in 2020.

  • Coronavirus-related distribution income can be spread out over three tax years – potentially lowering your overall tax hit. However, it may make sense to report the entire distribution this year if your estimated income for tax year 2020 is unusually low.

  • If your 401(k) plan allows for employee loans, the CARES Act doubled the amount you may borrow from $50,000 to $100,000 in 2020.


Know that these tax breaks will expire December 31, 2020, unless Congress acts to extend them.


Take Action
For most people, the best path is the same as always:

Stay the course with your investments. Remember that markets have historically recovered and reached new highs.* You do not want to miss out on the upswing, so maintain an asset mix in your portfolio that’s appropriate for your needs, goals, time horizon and risk tolerance. This may require that you work with your financial professional to assess your situation and rebalance your portfolio.


During stressful times like these, it is important to reign in emotions so as to prevent making bad decisions. Work closely with your tax and financial professionals to help focus your savings and tax strategies toward a financially secure future.


*https://www.morningstar.com/features/what-prior-market-crashes-can-teach-us-in-2020 . Past performance does not indicate future results.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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