Spring Cleaning For Your Finances: CARES Act Provisions For Retirement Savings, Charitable Giving

Thirty percent of Americans dipped into their retirement savings last year; provisions in the CARES Act took away the tax penalty for taking that money out early.

“Now, going into the next year, if people did take out that contribution, they’re able to put it back in over the next three years,” said Kelli Tampio, a financial advisor with Edward Jones. “So if you’re in a better financial position going into 2021 and you did take money out, please consult your tax advisor as an opportunity to ramp that savings back up towards your retirement.”

For some, increasing those contributions has become a viable option over the last year.

“Some people were able to save money over the last year and now they have a little more savings,” Tampio said. “You might think about increasing contributions towards a retirement plan. I always tell clients to have a gradual approach, maybe increase your savings one percent this year, and that’s a great way to have this steady approach to retirement savings.”

She says Spring is a good time to review overall investment strategies and decisions.

“I think we’re in a much more stable position now,” Tampio said. “The outlook, moving forward, is good; there’s a lot of pent-up demand, people who want to get out and start spending money, so I think it’s a good time to review your portfolio and make sure it’s in line with how you feel about risk and the market. I think last year really gave us a sense of what it’s like and how it feels with your investments to go through a down market, and if you were nervous, or thought you were taking on too much risk, it’s the opportunity to rebalance, readjust and get yourself back on track.”

The CARES Act is also changing the way charitable contributions are taxed for the 2020 tax season.

“A lot of people wanted to give back to the community last year, and they are able to take what’s called an above-the-line deduction,” Tampio said. “It’s a great way to support our community during this time, get it going back in the right direction, and get that tax deduction, so that is something you want to alert your CPA or tax advisor on to find out if there’s any opportunities moving forward.”


Source: KTVN 2 News