The media is looking for COVID-19 stories: Will they find you?


Media outlets are looking for financial stories related to the coronavirus pandemic. Here’s how you can be the ‘expert’.

Your local media outlets, both print, and television, are hungry for financial stories related to the Coronavirus pandemic and chances are they don’t know who you are or the solutions you could potentially provide. That means there are likely dozens of seniors in your community at this very moment in serious financial distress who could use your services. Older homeowner’s who may not want to sell off their stocks, who have little or no investments or want to secure their home’s value based on today’s market. So what should you do?

 

3 comments

Kendis Campbell April 13, 2020 at 4:27 am

Hi Shannon, Which case do you want to start with first? In Ohio the couple in their 80’s are eliminating a mortgage freeing up cash flow to help the ease strain on their IRA withdrawals. My client in FL has a cute little house oceanside that her partner left her last year but her $700 mortgage payment is still a stretch with just her social security so she is going to pay off the 100k mortgage and be able to live on a portion of the 400k of remaining equity. Just closed two retired teachers with great pensions and ss income but zero savings, they were concerned about leaving each other with the mortgage AND a HELOC payment, they did a reverse and even came away with almost $10k to start their savings plan. And another that has IRA’s that wants to stop paying mortgage payments and use the money to purchase a combo life/ltc so they won’t have to use taxable IRA funds to pay for care in the future. This is just to name a few of the people that needed help right now that saw that their savings were at risk or that their cash flow was just not taking them as far as they thought it would. The retired teachers said it’s costing them a whole lot more for groceries because they are having them purchased for them and delivered. They said they never thought they’d see the day that this would happen. We host get togethers every week and here we can’t even get out to shop for our own food. (I am a Reverse Mortgage Planner with Fairway nmls 433455 – 704-281-1253 Fort Mill, SC) There are so many stories like these. Lic in NC, SC, FL, OH

Reply
James E. Veale, CPA, MBT April 14, 2020 at 1:11 am

Shannon,

You are only an expert if the information you present is correct. As to tax rules, most reverse mortgage originators are ill equipped to relay their complexity ina correct manner. For example, the relief from the 10% early withdrawal penalty only applies to an individual:

“(I) who is diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention,

(II) whose spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is diagnosed with such virus or disease by such a test, or

(III) who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate).”

While many may qualify under (III) above, qualification is not automatic. For example, hospital employees generally will not qualify under (III) but can qualify under (I) or (II) above. The same holds true for FEMA employees, those servicing in the armed forces, police, fire, grocery store employees, a large portion of truckers, certain municipal and state employees, and on and on.

The distribution(s) must be made after 12/31/2019 but before 1/1/2021 from a qualified plan or IRA on a date before the recipient reaches age 59 and 1/2.

NEXT, there is NO 20% IRS PENALTY that could apply or that be automatically forgiven. Shannon is most likely referring to the 20% withholding tax on taxable qualified retirement plan and IRA distributions. This is not a penalty but rather withholding which when taken out of the distribution can be claimed and applied against the income tax liability for the tax year in which the distribution is taxable to its recipient.

The tax law is intended to provide up to a three year loan of as much as $100,000 out of one’s vested interests in an IRS Qualified retirement plan, IRA, and certain other retirement vehicles. Any portion that is not paid back as required is subject to income tax, penalties (except for early withdrawal penalty), and interest. For those who are considering such withdrawals, it is important to read the law AND seek help from a tax adviser who is knowledgeable and experienced in such matters.

The actual law on this subject can be found in Public Law 116-136, Section 2202 at

https://www.congress.gov/bill/116th-congress/house-bill/748/text

Reply
Shannon Hicks April 14, 2020 at 9:58 am

Thank you Jim for clarifying the finer points of these stimulus provisions. We will most likely see more changes and clarification from government agencies.

Reply

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