DAY 8: CURO Quarantine Series
Stay Positive. Stay Focused. Stay Strong (and home).
For the next three weeks, we will share the most important takeaways from the latest economic events to help our clients, friends and the rest of the community make imperative and well informed financial decisions. Everything from how to support your local businesses to how to navigate new tax laws - the CURO Team has the answers.
What do you want to learn about? Share your questions here.
Please feel free to share these updates with a friend or family member you're feeling especially thankful for.
Wellness & Well-being: For our friends who prefer a more holistic approach to health and wellness: The Himilaryan Institute is offering a $35 Dinacharya Bundle for a more supportive morning routine. Click for more information.
Local businesses: Volunteers around the country are partnering with Joann Fabrics to reach a goal of sewing 100 million masks for donation to healthcare workers. As a proud partner of Commonwealth Financial Network, who has already delivered over 1,000 masks, we are joining the cause. If you would like to become a part of this generous mission, please follow this LINK provided by Joann Fabrics and Craft Stores.
Overwhelmed by the changes under the CARES Act? Here are THREE IMMEDIATE planning ideas to implement:
Q: I am getting a refund check now for portion of college tuition & used 529 funds for the original payment in 2019. Is my refund TAXABLE?
Tuition reimbursement has always been a provision in the Code to address this. The IRS Publication 970 addresses all things education, and that link goes to the section stating that reimbursements may be recontribute to the 529 (called a QTP in the Code) within 60 days of the reimbursement. As long as they do that, no other calculations are necessary. If they do not return it to the 529, then, yes, the amount that was reimbursed would be a nonqualified disbursement and they would owe taxes on the earnings associated with disbursement (calculations are discussed here) along with the 10% penalty on those earnings. Since last tuition was paid in 2019, refund will be TAXABLE if sent directly to student or parent. INSTEAD, request for it to be applied towards next semester's tuition and you will owe the difference at the end of the summer.
Q: The CARES Act allows to skip Required Minimum Distributions (RMDs) for 2020. If I don’t need RMDs to live on, should I still take them this year?
Consider doing a full or partial ROTH IRA conversion instead. You still must pay income tax on conversion (just like you would when taking RMDs), but the benefits of future tax-free growth and legacy planning is substantial. Also, keep in mind that conversion can be done in-kind, which means no sale of current IRA investment is needed at the depressed values.
Q: Trying to cut your living expenses? You can request forbearance on your mortgage.
The CARES Act requires providers of federally backed mortgages to allow anyone affected by the coronavirus pandemic to request forbearance for up to 180 days. It didn’t suspend interest, so that will still accrue, but there shouldn’t be any extra fees or penalties if you request a pause in payments. Just read the fine print to understand how your lender will treat the missed payments — you typically either have to pay them all at once at the end of the loan period, or your loan might be extended for the number of months you asked to pause payments.
