CARES ACT and ITS IMPACT ON RMDs: As you may know, the recently enacted “Coronavirus Aid, Relief, and Economic Security Act” or CARES Act included a provision to suspend required minimum distributions from IRA’s also known as an ‘RMD’ in 2020 for everyone. An RMD is typically required for people with IRA’s who are age 72 or older.
If you have already taken an RMD within the last 60 days or you take a monthly distribution, we will be coordinating with you about potential options or changes you can make. This might include refunding your IRA, changing the account you receive distributions from for living needs or stopping/changing the distribution for this year.
For those who defer their RMD until later in the year, we will be discussing with you at that time whether you wish to take the IRA distribution or if you will skip for this year. Monies withdrawn from an IRA are considered taxable income and to the extent you can avoid taking an IRA distribution, your tax bill would be lower for 2020.
NEW YORK IN FOCUS: New York, which seems to be out ahead of most other areas of the country in cases, saw an increase of 8,243 to 123,018, which was a smaller gain than the prior day. New York Governor Andrew Cuomo noted that coronavirus deaths declined for the first time and hospitalization fell. The Javits Center in New York City will now be converted to a COVID-19 positive-only site with 2,500 beds, to help alleviate pressure on hospital ER’s and ICU’s.
One of the main reasons we are seeing such spikes in cases is the increase in U.S. coronavirus tests. Cases will likely continue to ramp up and spread more widely throughout the country as testing continues to catch up.
Vice-president Mike Pence noted on Sunday that he is seeing “glimmers of progress” in COVID-19 data. New cases of U.S. coronavirus jumped 25,316 on Sunday to 336,673, by far the most of any country. This figure was a decline from Saturday’s reported new cases which was a record 34,196. While it is too soon to establish a trend, it was the first drop since March 21. Deaths from Covid-19 increased by 1,166 yesterday to 9,615 citizens.(1)
All in all, the coming two to three weeks will be pivotal to us and our understanding of just how much loss we’ll be enduring as a country. We remain hopeful amidst the wash of often disorienting stream of 24/7 news.
AFTER THE PANDEMIC: MEDIUM- TERM GROWTH UNCERTAINTIES FROM OXFORD ECONOMICS: “The coronavirus is set to have a very large short-term negative impact on world growth. But the medium-term growth outlook is more uncertain. Much depends on the policy response – a strong and well-designed response could contain the medium-term output losses, but large and enduring damage is a risk.
Growth patterns after significant GDP declines vary. Historical evidence points to large upfront effects from pandemics and natural disasters, but the medium-term outcomes are mixed, with policy responses a crucial determinant. Longer recessions and financial crises tend to lead to weaker medium-term growth.
The coronavirus may trigger annual GDP declines among the worst seen in the last 100 years. Economies can bounce back sharply after such declines, but our analysis suggests output losses also endure in a significant number of cases.”(2)
FINAL THOUGHTS & STAYING CONNECTED: Our sense is that the next couple of weeks will continue to be a real challenge as cases are seemingly spreading to the Mid-Atlantic region and in our home state of Pennsylvania. We are fortunate and grateful to be working at full capacity, albeit remotely, to serve our clients, friends and neighbors. We believe how we live with our priorities in full bloom as conditions like these persist, is really important to us as a team. We consider it an honor to continue to do so on your behalf.
Investors Business Daily, April 6, 2020.
Oxford Economics, April 6, 2020.