November Is Long Term Care Month

/in /by

Addressing the potential threat of long-term care expenses may be one of the biggest financial challenges for individuals who are developing a retirement strategy.

The U.S. Department of Health and Human Services estimates that 70% of people over age 65 can expect to need long-term care services at some point in their lives.1 So understanding the various types of long-term care services – and what those services may cost – is critical as you consider your retirement approach.

WHAT IS LONG-TERM CARE?

Long-term care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability – most commonly associated with aging.

Long-term care can include everything from assistance with activities of daily living – help dressing, bathing, using the bathroom, or even driving to the store – to more intensive therapeutic and medical care requiring the services of skilled medical personnel.

Long-term care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And long-term care is not exclusively for the elderly; it is possible to need long-term care at any age.

WHAT IS LONG-TERM CARE?

Long-term care is not a single activity. It refers to a variety of medical and non–medical services needed by those who have a chronic illness or disability – most commonly associated with aging.

Long-term care can include everything from assistance with activities of daily living – help dressing, bathing, using the bathroom, or even driving to the store – to more intensive therapeutic and medical care requiring the services of skilled medical personnel.

Long-term care may be provided at home, at a community center, in an assisted living facility, or in a skilled nursing home. And long-term care is not exclusively for the elderly; it is possible to need long-term care at any age.

HOW MUCH DOES LONG-TERM CARE COST?

Long-term care costs vary state by state and region by region. The 2018 national average for care in a skilled care facility (single occupancy in a nursing home) is $100,380 a year. The national average for care in an assisted living center (single occupancy) is $48,000 a year. Home health aides cost a median $22 per hour, but that rate may increase when a licensed nurse is required.2

WHAT ARE THE PAYMENT OPTIONS?

Often, long-term care is provided by family and friends. Providing care can be a burden, however, and the need for assistance tends to increase with age.1

Individuals who would rather not burden their family and friends have two main options for covering the cost of long-term care: they can choose to self-insure or they can purchase long-term care insurance.

Many self-insure by default – simply because they haven’t made other arrangements. Those who self-insure may depend on personal savings and investments to fund any long-term care needs. The other approach is to consider purchasing long-term care insurance, which can cover all levels of care, from skilled care to custodial care to in-home assistance.

When it comes to addressing your long-term care needs, many look to select a strategy that may help them protect assets, preserve dignity, and maintain independence. If those concepts are important to you, consider your approach for long-term care.

Source: National Alliance for Caregiving in collaboration with AARP, 2015 (most recent data available)

FedSavvy Educational Solutions takes no responsibility for the current accuracy of this information. Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory Services offered through J.W. Cole Advisors (JWCA). FedSavvy and JWC/JWCA are unaffiliated entities. Securities are not FDIC insured or guaranteed and may lose value. Investments are not guaranteed and you can lose money. This presentation is for educational purposes only and is not an offer to buy or sell an investment. Neither FedSavvy nor  JWC/JWCA are tax or legal advisors and this information should not be considered tax or legal advice. Consult with a tax and/or legal advisor for such issues.

Some Long-Term Care Thoughts from a Long-Time Subscriber

/in /by

“I had a comment about LTC coverage, my mom had a number of health issues and required institutional 24/7 “memory” care the final year of her life. My dad found out the hard way how expensive the care costs in 2017. It was over $12,000 a month at the “nicest” hospital. He wound up moving mom to a more “affordable” place and the difference In quality of care and facilities was quite shocking to say the least. Going from Cadillac to Yugo was rough on my dad. At the new place my mom shared a room with a retired agent’s mom, in the Cadillac place she had a room of her own. From the questions the agent asked me, he had his doubts about the place but it was only one of two places in Memphis that could support our mom’s needs and this one cost about 1/3 of the other facility. If you can’t self insure for at least $300,000 I would get LTC coverage now because if you can’t afford either one of these options you wind up sitting at home hoping and praying the nurse who comes by once a day or three times a week depending on what you can afford makes it by that day. For six years before she had to be institutionalized my sister helped take care of my mom at home while she still could move around on her own and didn’t wander. The toll financially and emotionally can be devastating to the family for years to come.

I say get it now because if I tried to get it today it would cost me a lot because of underlying health conditions and now my family history, if I could get it at all. Luckily for us we,re comfortable enough to self insure. That being said don’t trust my numbers, please consider checking with your financial advisor and insurance professional to help guide you through this decision. We did and are glad we have it checked off our list.“

FedSavvy Educational Solutions takes no responsibility for the current accuracy of this information. Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC.  Advisory Services offered through J.W. Cole Advisors (JWCA). FedSavvy Educational Solutions and JWC/JWCA are unaffiliated entities. Securities are not FDIC insured or guaranteed and may lose value.  Investments are not guaranteed and you can lose money.   This presentation is for educational purposes only and is not an offer to buy or sell an investment. Neither FedSavvy Educational Solutions nor JWC/JWCA are tax or legal advisors and this information should not be considered tax or legal advice.  Consult with a tax and/or legal advisor for such issues.

Unprecedented Relief! ALL Unwanted RMDs Taken In 2020 Can Now Be Returned – Rolled Over – Back To An IRA Or Company Plan

/in /by

IRS Announces BLANKET Relief for Unwanted 2020 RMDs!IRS released IRS Notice 2020-51 which extended the deadline to August 31, 2020 to return any unwanted 2020 RMDs.

By “ALL” we mean ALL, even non-spouse IRA or plan beneficiaries (who could never do a rollover… until now). The 60-day rollover period is extended to August 31, 2020, no matter when in 2020 the RMD was taken. For example, if an RMD was taken in January 2020, it can still be returned by August 31, 2020. In addition, the once-per-year rule is waived for this relief, so those who took monthly RMDs earlier in the year can return them all.

This new guidance applies to RMDs only. Withdrawals of non-RMD funds are still bound by the one-rollover-per-year rule and the standard 60-day rollover rule.

FedSavvy Educational Solutions takes no responsibility for the current accuracy of this information. Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory Services offered through J.W. Cole Advisors (JWCA). FedSavvy Eduational Solutions and JWC/JWCA are unaffiliated entities. Securities are not FDIC insured or guaranteed and may lose value. Investments are not guaranteed and you can lose money. This presentation is for educational purposes only and is not an offer to buy or sell an investment. Neither FedSavvy and JWC/JWCA are tax or legal advisors and this information should not be considered tax or legal advice. Consult with a tax and/or legal advisor for such issues.

Questions Concerning TSP and the CARES Act

/in /by

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. Since then we have received numerous questions and wanted to share them specifically as they apply to TSP.

Question 1: I’ve heard that the CARES Act is waiving Required Minimum Distributions (RMDs) for 2020. Who does this apply to?

Answer 1: This applies to separated TSP participants that are age 70 ½ or older in 2019. If they are turning 70 ½ in 2020 or later, the SECURE Act extends RMDs to the year a TSP or other retirement plan owner attains age 72. The CARES Act has waived RMDs in 2020 for separated TSP, 401(k), 403(b), and 457 participants along with traditional IRAs SEP IRAs, SIMPLE IRAs, and Inherited IRAs.

If a TSP participant is still working beyond their required beginning date, they will not have had to take an RMD until they retire.

Question 2: When will I be eligible to apply for the increased TSP loan options that were included in the CARES Act?

Answer 2: The TSP bulletin board’s update on May 18, 2020 states that loan options will be available no later than June 22, 2020 for TSP participants affected by COVID-19. Both loan and withdrawal options are available to you only if you meet one or more of the following criteria:

You have been 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. Your spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) has been diagnosed with such virus or disease by such a test. You are experiencing 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.

Temporary Loan Options for affected individuals:

Increased maximum loan amount The maximum loan amount is increased from $50,000 to $100,000, and the portion of your available balance you can borrow is raised from 50% to 100%. The deadline for applying for a loan with this increased maximum will be in September 2020. TSP will announce the exact cutoff date soon.

Temporary suspension of loan payments
You may suspend your obligation to make payments on your TSP loan or loans for 12 months, which will also extend the term of your loan by 12 months. This applies to existing loans and loans taken in the remainder of 2020. TSP will make a new form available for you to request this suspension. You have until December 31, 2020, to have your payments suspended.

Question 3: What are the CARES Act TSP withdrawal options and when will they be available?

Answer 3: The CARES Act created special rules for most types of TSP withdrawals made by participants affected by COVID-19.

TSP is working on a new, temporary withdrawal option that will waive the usual in-service withdrawal requirements and allow all COVID-affected participants to waive tax withholding. TSP states that details will be available soon.

A coronavirus-related distributionis “a distribution (withdrawal) that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $100,000 from all plans and IRAs.” That means $100,000 is the maximum amount across all your retirement plans combined and includes special tax advantages.

You must designate your withdrawal(s) as a coronavirus-related distribution when you file your taxes. To do that, you’ll file Form 8915-E, which the IRS is expected to make available before the end of 2020.

Meanwhile, many TSP participants that are affected by COVID-19 can take advantage of the withdrawal provisions of the CARES ACT, using withdrawal types for which they are already eligible:

· Current federal employees are eligible under the existing in-service withdrawal rules: such hardship withdrawals and age-based in-service age 59 ½ or older

· Separated from service during the year you reached 55 or later (50 for special category employees) or a beneficiary participant. You may be eligible for favorable tax treatment right now without waiting for the new withdrawal option to be available.

Question 4: Can I take a withdrawal from TSP pre-59 ½?

Answer 4: TSP is working on making this available by June 22, 2020. If you designate your withdrawal as a coronavirus related distribution when you file your taxes, the IRS will waive the 10% additional tax on early distributions.

Question 5: If I need to take a coronavirus related distribution, will the IRS waive the taxes owed?

Answer 5: No, but good try! The IRS is providing more favorable tax treatment. You may spread the distribution proportionately over a three-year period, starting with the year in which you receive your distribution. Example: Megan receives a $30,000 coronavirus-related distribution in 2020. She could report $10,000 of income on her federal income tax return for 2020, 2021, and 2022. This is optional and you could also choose to include all the income in the year of the withdrawal.

Question 6: If I take a coronavirus related distribution, does TSP withhold federal taxes?

Answer 6: No, they will not withhold the mandatory 20% unless you request tax withholding.

Question 7: My husband was diagnosed with the coronavirus and it is hard to pay our bills right now with his loss of income. If I do take a distribution from my TSP and am able to pay it back, is that permitted?

Answer 7: Yes, this would count as a coronavirus-related distribution (CRD) and you could repay all or part of the amount of the distribution back to TSP or an eligible retirement plan, provided that you complete the repayment within three years after the date that you received the distribution. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct plan-to-plan transfer so that you do not owe federal income tax on the distribution.

Please contact us if you have any questions about the CARES Act provisions and how they apply you.

FedSavvy Educational Solutions takes no responsibility for the current accuracy of this information. Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory Services offered through J.W. Cole Advisors (JWCA). FedSavvy Eduational Solutions and JWC/JWCA are unaffiliated entities. Securities are not FDIC insured or guaranteed and may lose value. Investments are not guaranteed and you can lose money. This presentation is for educational purposes only and is not an offer to buy or sell an investment. Neither FedSavvy and JWC/JWCA are tax or legal advisors and this information should not be considered tax or legal advice. Consult with a tax and/or legal advisor for such issues.

Federal Retirement Thrift Investment Board Members Is Delaying the Implementation of the (I) Fund Benchmark Change

/in /by

Due to a meaningfully different economic environment related in large part to the impact of the global COVID-19 pandemic, as well as the nomination of three new Federal Retirement Thrift Investment Board Members, pending further study, the Federal Retirement Thrift Investment Board is delaying the implementation of the I Fund benchmark change to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index.

In 2017 a decision was made to change the (I) Fund index from the MSCI Europe, Australasia and Far East Index to the more comprehensive MSCI All Country World Ex-US Investable Market Index, which includes investments in markets around the world, most notably Canada and China.

In a letter to Labor Secretary Eugene Scalia, from Natl. Economic Council Director, Larry Kudlow and Natl.  Security Adviser, Robert O’Brien.  It stated that the (I) Fund change would “expose the retirement funds to significant and unnecessary economic risk,” citing Chinese human rights abuses and the COVID-19 Pandemic.

The letter further states “The Chinese Government’s intentional thwarting of US investor protections should raise serious concerns about the reliability of financial information from Chinese companies and demonstrate significant concerns to investors, especially retail investors such as TSP beneficiaries of investing in the companies listed on the Chinese exchanges that would be represented in the new index”.

 “The Federal Retirement Thrift Investment Board is set to implement these plans during a time of mounting uncertainty concerning China’s relations with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese government with respect to the global spread of the COVID-19 pandemic,” they wrote.

Scalia wrote. “This now is the only acceptable course, given the concerns expressed by the president’s advisers and the chairs of the SEC and [accounting oversight board], as well, of course, as the president’s own directive to the board”.