IRS Clarifies COVID-19 Relief Measures for Retirement Savers

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 ushered in several measures designed to help IRA and retirement plan account holders cope with financial fallout from the virus. The rules were welcome relief to many people, but left questions about the details unanswered. In late June, the IRS released Notices 2020-50 and 2020-51, which shed light on these outstanding issues.

Required minimum distributions (RMDs)

One CARES Act measure suspends 2020 RMDs from defined contribution plans and IRAs. Account holders who prefer to forgo RMDs from their accounts, or to withdraw a lower amount than required, may do so. The waiver also applies to account holders who turned 70½ in 2019 and who would have had to take their first RMD by April 1, 2020, as well as beneficiaries of inherited retirement accounts.

One of the questions left unanswered by the legislation was: "What if an account holder took an RMD in 2020 before passage of the CARES Act and missed the 60-day window to roll the money back into a qualified account?"

In April, IRS Notice 2020-23 extended the 60-day rollover rule for those who took a distribution on or after February 1, 2020, allowing participants to roll their money back into an eligible retirement account by July 15, 2020. This seemingly left account owners who had taken RMDs in January without recourse. However, IRS Notice 2020-51 rectified the situation by stating that all 2020 RMDs — even those received as early as January 1 — may be rolled back into a qualified account by August 31, 2020. Moreover, such a rollover would not be subject to the one-rollover-per-year rule.

This ability to undo a 2020 RMD also applies to beneficiaries who would otherwise be ineligible to conduct a rollover. (However, in their case, the money must be rolled back into the original account.)

This provision does not apply to defined benefit (pension) plans.

Coronavirus withdrawals and loans

Another measure in the CARES Act allows qualified IRA and retirement plan account holders affected by the virus to withdraw up to $100,000 of their vested balance without having to pay the 10% early-withdrawal penalty (25% for certain SIMPLE IRAs). They may choose to spread the income from these "coronavirus-related distributions," or CRDs, ratably over a period of three years to help manage the associated income tax liability. They may also recontribute any portion of the distribution that would otherwise be eligible for a tax-free rollover to an eligible retirement plan over a three-year period, and the amounts repaid would be treated as a trustee-to-trustee transfer, avoiding tax consequences.¹

In addition, the CARES Act included a provision stating that between March 27 and September 22, 2020, qualified coronavirus-affected retirement plan participants may also be able to borrow up to 100% of their vested account balance or $100,000, whichever is less. In addition, any qualified participant with an outstanding loan who has payments due between March 27, 2020, and December 31, 2020, may be able to delay those payments by one year.

IRS Notice 2020-50

To be eligible for coronavirus-related provisions in the CARES Act, "qualified individuals" were originally defined as IRA owners and retirement plan participants who were diagnosed with the virus, those whose spouses or dependents were diagnosed with the illness, and account holders who experienced certain adverse financial consequences as a result of the pandemic. IRS Notice 2020-50 expanded that definition to also include an account holder, spouse, or household member who has experienced pandemic-related financial setbacks as a result of:

• A quarantine, furlough, layoff, or reduced work hours
• An inability to work due to lack of childcare
• Owning a business forced to close or reduce hours
• Reduced pay or self-employment income
• A rescinded job offer or delayed start date for a job

These expanded eligibility provisions enhance the opportunities for account holders to take a CRD.

The Notice clarifies that qualified individuals can take multiple distributions totaling no more than $100,000 regardless of actual need. In other words, the total amount withdrawn does not need to match the amount of the adverse financial consequence. (Retirement investors should consider the pros and cons carefully before withdrawing money.)

It also states that individuals will report a coronavirus-related distribution (or distributions) on their federal income tax returns and on Form 8915-E, Qualified 2020 Disaster Retirement Plan Distributions and Repayments. Individuals can also use this form to report any recontributed amounts. As noted above, individuals can choose to either spread the income ratably over three years or report it all in year one; however, once a decision is indicated on the initial tax filing, it cannot be changed. Note that if multiple CRDs occur in 2020, they must all be treated consistently — either ratably over three years or reported all at once.

Taxpayers who recontribute amounts after paying taxes on reported CRD income will have to file amended returns and Form 8915-E to recoup the payments. Taxpayers who elect to report income over three years and then recontribute amounts that exceed the amount required to be reported in any given year may "carry forward" the excess contributions — i.e., they may report the additional amounts on the next year's tax return.

The Notice also clarifies that amounts can be recontributed at any point during the three-year period beginning the day after the day of a CRD. Amounts recontributed will not apply to the one-rollover-per-year rule.

Regarding plan loans, participants who delay their payments as permitted by the CARES Act should understand that once the delay period ends, their loan payments will be recalculated to include interest that accrued over the time frame and reamortized over a period up to one year longer than the original term of the loan.

Retirement plans are not required to adopt the loan and withdrawal provisions, so check with your plan administrator to see which options might apply to you. However, qualified individuals whose plans do not specifically adopt the CARES Act provisions may choose to categorize certain other types of distributions — including distributions that in any other year would be considered RMDs — as CRDs on their tax returns, provided the total amount does not exceed $100,000.

For more information, review IRS Notices 2020-50 and 2020-51, or talk to us.

¹Qualified beneficiaries may also treat a distribution as a CRD; however, nonspousal beneficiaries are not permitted to recontribute funds, as they would not otherwise be eligible for a rollover.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first.  If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

2020: Not Your Average Election Year

If you decided to take a long nap on New Year's Eve and just woke up today, looked at your account statements, you might have yawned at how unchanged and boring the market must have been. You'd probably think, "on average, the market has been unchanged."

But that's the problem of averages when it comes to the stock market -- they can wall-paper over a lot of painful experiences, like the tech bubble of 1999-2000, and the housing bubble of 2006-2007.

Considering the health catastrophe created by COVID-19, the strong rebound in stocks since the late-March low is astounding, especially given the deep economic damage. But given that the stock market is a forward-looking discount mechanism, it suggests that the collective wisdom of investors is more optimistic than the evidence that we hear and read about every day.

Stock markets continue to express little concern about the many uncertainties in this environment. Stock market valuations have met or exceeded their pre-crisis levels by most measures and continue to expand despite the major ongoing risks. Existing home sales in June of 4.7 million exceeded a record level on the back of falling interest rates, even as the number of unemployment claims ticked up last week for the first time in four months.

Federal Reserve support, rock bottom interest rates, the re-opening trade, and stronger economic data have helped. I also believe investors are looking past this year’s hit to corporate profits and are expecting an upturn in 2021.

The jump in daily COVID cases has created some renewed volatility, and it bears watching, but it has yet to knock the bulls off course. New all-time highs in the stock market in the weeks ahead would not surprise me one bit (the NASDAQ index has already done it). Even more surprising, it's entirely possible that we've embarked on a new bull market.

While we are cautiously optimistic and giving this market the benefit of the doubt, we are maintaining our defensive allocation, primarily due to the persistent level of exuberance in the markets and resulting current overvaluation, as well as the uncertainty around possible rollbacks in re-openings.

Ultimately, the path of the virus will play the biggest role in how the economic outlook unfolds. Some folks are itching to get back to normal, while others remain on guard against the disease and are taking a more cautious approach. It may take time for some businesses to fully recover. Some never will.

Last month I opined, “I don’t expect a return to a pre-Covid jobless rate anytime soon. But investors are betting that an economic bottom is in sight.”

Try to look past continued volatility. With elections coming up this year, I expect more wacky market moves to go along with the typical wacky political moves we always see in a presidential election year. Regardless, based on recent economic reports, I think we hit bottom in April.

Those worried about a return to the March lows currently don't have much evidence in terms of stock market action to support their worries. With so much money on the sidelines, it seems that every little dip is getting bought by those left behind in the panic.

If you liken the February-March stock market crash to an earthquake, then sure, you may feel some tremors and aftershocks for months, but the likelihood of another earthquake within a short period of time is highly improbable.

What to Do

None of us expected an economic upheaval spawned by a health crisis as the year began. But it pays to discuss some of the lessons and takeaways from the COVID-19 crisis.  And as I discuss them, you’ll probably recognize some of the themes (yes I do repeat myself frequently, like a nagging parent). Let’s not forget that the fundamentals—the core financial precepts—are always the building blocks of any credible financial plan.

1. Money at the end of your month

Saving for an emergency cannot be underestimated. Six to nine months of spending needs is optimal. But there is an added benefit—financial peace of mind.

It’s reflected in the proverb “The borrower is servant to the lender.” It’s not that I would counsel against a mortgage for a home or a reasonable loan for a car. But accumulation of wants (not needs) with (credit card) debt doesn’t bring contentment.

Instead, it brings stress. I have seen it over and over. You want money at the end of your month, not month at the end of your money.

A financial cushion eliminates one of life’s worries.

2. Wants vs. needs

Many of us have learned to do without certain things during quarantine. Whether we wanted to or not, we were forced to cut back on certain items.

Ask yourself this question, “As businesses reopen, are there things I can do without? Can I continue to cut back and still maintain my lifestyle?”

Many of our entertainment options have been curtailed. As we emerge from our homes and businesses re-open, are there items that can be trimmed from the budget?

It’s not a cold turkey approach, i.e. no more eating out, sporting events, travel or theater. But can we reduce expenditures on some items without sacrificing our overall lifestyle?

3. Diversification and tolerance for risk

We’ve just witnessed an unusual amount of stock market volatility. Calling it a roller coaster does not fully capture the experience (and most amusement parks are still shuttered!)

The major indexes have erased much of their losses. Yet, how did you fare emotionally when stocks took a beating? Now is the time to reevaluate your tolerance for risk. We’d be happy to assist and make any adjustments as they relate to your longer-term financial goals.

4. Expecting the unexpected

From its March 2009 low to the February 2020 high, the bull market ran for over 10 years (measured by the S&P 500 Index). We know bear markets are inevitable, but I recognize that the onset of a steep decline may be unnerving.

Nonetheless, a well-diversified portfolio of stocks has historically had an upside bias. That upside bias is incorporated into the recommendations we make, even as our recommendations are tailored to your individual circumstances and goals.

Further, a mix of fixed income and contra-funds helped cushion the decline. While we monitor events and the markets over a shorter-term period, let’s be careful not to take our eyes off your longer-term goals.

Be proactive, not reactive

The ideas above are a broad overview and individual circumstances may vary.

Taking inventory is critical. It’s half the battle. Be proactive, not reactive. You may find you are in a much better position than you realized. As always, we are here to help.

I hope you’ve found this review to be helpful and educational.

I understand the uncertainty facing all of us. We are grappling with an economic and a health care crisis. It’s something none of us have ever faced. We have addressed various issues with you, but I have an open-door policy. If you have questions or concerns, let’s have a conversation. That’s what I’m here for.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first.  If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

What's Going on in the Markets June 7, 2020

 Over the past week, the stocks of American Airlines, United Airlines and Delta Airlines were up 77%, 51% and 35% respectively. In addition, the stocks of Norwegian Cruises, Carnival Cruises and Royal Caribbean Cruises were up 43%, 37%, and 34% respectively.

But none was more bizarre than the stock of Hertz Car Rental, which was up a whopping 157% on the week. Now it's not unusual for a cheap stock trading for $1.00 a share to double or triple in a week. But it is unusual when the company has already declared bankruptcy, meaning that stockholders will likely receive nothing in the reorganization.

In what I can only describe as a bit of overexuberance in a world where many don't plan to get on an airplane in the next 12 months, and others who say they'll never step foot on a cruise ship in their lifetimes again, can I say that the recent rally is getting a little "bubblelicious"?

That's all to say that I cannot remember a time when I’ve seen such a widespread disparity between what is happening in the economy and what is happening in the stock market.

Let’s take a few moments to briefly outline the situation using hard data.

• The unemployment rate soared to a post-depression high of 14.7% in April, while the survey of businesses by the U.S. Bureau of Labor Statistics revealed a loss of 20.5 million jobs in April, the worst monthly reading since records began in 1939.
• In a single month, nearly all of the jobs created after the financial crisis disappeared, at least temporarily.
• Then on Friday we got the May Jobs report and we were surprised that the economy had created 2.5 million jobs and the unemployment rate had actually declined to 13.3%. While 13.3% unemployment is a "depression-like" number, it was far better than numbers projected by economists: a loss of 7.5 million jobs and a 20% unemployment rate. To paraphrase Yogi Berra: "forecasting is hard, especially when it's about the future".
• April’s 11.2% drop in industrial production, a metric the Federal Reserve has tracked since 1919 – is the biggest monthly decline on record. Furthermore, consumer spending in April fell 13.6%, the biggest decline ever recorded (U.S. BEA, data back to 1959).
• The Institute for Supply Management's (ISM) Manufacturing Index and the ISM Services Index both showed a slight improvement in May; however, both segments remain deep in contraction territory.
• Record layoffs continue, with the number of first-time claims for unemployment insurance topping 40 million over a 10-week period ending May 23. Put another way, nearly one in four working Americans have experienced a job loss.

If there is any good news, it is that the number of first-time filings has been declining, and the number of individuals who re-certify on a regular basis in order to continue receiving jobless benefits is about half the number of first-time filings.

This would suggest that the economic injury disaster loans and payroll protection program loans are kicking in, and re-openings are encouraging businesses to recall furloughed workers.

Let’s Back Up Again for a Moment

• In April, in just a three-week period, the number of first-time claims for jobless benefits totaled an astounding 17 million. For perspective, during the 18-month-long 2007-2009 recession…first-time claims totaled 9.6 million.
• Yet the Dow Jones Industrial Average added 2,107 points over the three Thursdays when the massive number of new claims were released.
• Since then (April 9), the Dow has added 3,600 points, or 15.0%. It is up 49% since its near-term March 23 bottom.
• The broader-based S&P 500 Index eclipsed 3,000 by the end of May and has rebounded nearly 46% from its March 23 low to near 3,200.
• Meanwhile the tech-heavy NASDAQ Composite has added 48%, is back above 9,800, and has already surpassed its all-time high.

Simply put, economic activity is falling with depression-like speed, but the major averages are in the midst of an historic rally.

Here’s one more piece of performance data:

• During the financial crisis, the S&P 500 Index lost nearly 57% from its October 2007 peak to the bottom in March 2009. This year, in about one month, the S&P 500 Index shed 34% before hitting a near-term bottom on March 23.

The adage “stocks climb a wall of worry” has never been more appropriate amid economic devastation and an outlook that remains incredibly murky.

A Closer Look at the Wall Street/Main Street Disconnect

A combination of factors has fueled the rally since late March.

The response by the Federal Reserve has far outpaced its 2008 response, which has lent a tremendous amount of support to stocks. The same can be said of government fiscal stimulus.

Investors are also keeping close tabs on state re-openings, which will re-employ furloughed workers, help stabilize the economy, and set the stage for a possible economic rebound later in the summer. Talk of possible vaccines has also helped.

You see, investors don’t simply look at today’s data, which in many cases is backward-looking. Instead, they are forward-looking as they attempt to price in economic activity, the level of interest rates, corporate profits, and more over the next 6-12 months.

An Approaching Dawn

If we look at what is called “high-frequency economic data” (daily or weekly reports), we are starting to see signs of stability.

Daily gasoline usage has rebounded (Energy Information Administration), daily travel through TSA checkpoints is up, hotel occupancy is off the bottom, and the same can be said of weekly box office receipts (Box Office Mojo).

In addition, the weekly U.S. MBA’s Purchase Index (home loan applications) registered its fifth-best reading over the last year (as of May 22), suggesting that low-interest rates and some confidence that the U.S. economy is set to recover are lending support to housing.

Of course, these are highly unconventional measures of economic activity and are industry-specific. Outside of the Purchase Index, each remains well below previous highs, but the turnaround suggests we may be seeing some light at the end of a very dark tunnel.

Collective Wisdom

Any given level of a major stock market index represents the collective wisdom of tens of millions of stock market investors. It is not simply an opinion, but an opinion with money behind it. That’s an opinion worth listening to.

When stocks were in a free fall in March, investors were anticipating a devastating blow to the economy. Tragically, the data did not disappoint.

But has the rally been too much, too quickly?

Even in the best of times, economic forecasting can be difficult (refer to earlier Yogi Berra quote). Today, the outlook is clouded with a much greater degree of uncertainty.

1. Will the virus lay down over the summer?
2. How will re-openings proceed?
3. How quickly can a readily available vaccine and treatment be developed?
4. What might happen to COVID-19 next fall and winter?
5. How quickly will consumers venture back in public and resume prior spending patterns?

These are difficult questions to answer.

I don't expect a return to a pre-COVID jobless rate anytime soon. But investors are betting that an economic bottom is in sight or has already occurred.

I understand the uncertainty facing all of us and I don't underestimate the enormous amount of work that has to be done or the difficulties we'll encounter in getting back to "normal". We are grappling with an economic and a health care crisis, not to mention recent civil unrest. It’s a combination none of us have ever faced.

A New Bull Market or the Most Epic of all Bear Market Rallies?

For our clients' portfolios, I know that I will spend years analyzing the last few months and scrutinizing our moves. I'm pleased that we entered 2020 with a defensive stance that served us well. I'm also pleased that we followed our rules in further reducing portfolio risk and increasing hedges as we saw fit as the decline kicked into high gear. I'm very pleased that we held firm with our core holdings, never wavering from our belief that our core assets would ultimately be just fine, dividends would continue to accrue and that the foundation of our portfolios remained intact.

As we moved through the crash methodically with a steady hand and calm head,  I'm also pleased that not a single client panicked, and those that stuck with their investment plans and did not decide to tinker with their portfolio risk "on the fly" fared the best among our clients. Those that paid attention to the media (who regularly try their best to scare us witless), and who insisted on reducing their risk near the bottom and not follow their own investment plan still fared OK but cost their portfolios dearly. 

So I guess I'll say it again: Neither they, you, or I know what's going to happen next, no matter how smart we are. All we can do is watch the price action, put probabilities in our favor, and pay heed to risk. Ultimately, we're in the risk management business, not the prediction business.

What I'm not as pleased about is that we didn't more aggressively buy the panic that ensued in the market. Of course, this is easy to say in hindsight. It was my plan to do so, but the bounce proceeded too quickly and the shallow pullbacks did not allow for the necessary low-risk entries that I was planning for. While we bought some investments lightly on the way down and also on the way up, with the benefit of hindsight, we could have more aggressively reduced hedges and ramped up buying. 

I'm also not pleased that I underestimated the power of the Federal Reserve and found myself being overly moderate. Of course, the next few months could prove my current sentiment to be completely wrong and the gains quickly reverse. As it stands, it is my plan to increase our overall investment levels based on the "quality" of the next pullback.

Towards that end, if this is truly a new bull market, and the recession turns out to be one of the shortest ones on record, then the next pullback should be of the 5%-10% variety, and will give us a low-risk way to increase stock market exposure further.  If instead, this has been the "mother" of all bear market rallies, then our continued defensive stance will serve us quite well. Only time will tell.

Short-term, the market is a bit overheated, so a pullback could ensue any day now. For those who are phasing back into the market, or who need to rebalance their portfolio, it may be advantageous to wait for the pullback.

As we move forward from here, I'll be the first to admit that I still have no idea how this all plays out into the remainder of 2020. From the coronavirus, we have now moved to national demonstrations and riots which are affecting cities all across America. In just a few months we'll be heading directly into a presidential election. If that's not a recipe for elevated volatility for the rest of the year, I don't know what is.

On the investment horizon, I can tell you that this bust/ boom cycle we've just witnessed has solidified, more than ever, just how important it is to have a portfolio diversification not only in different asset types, but also across time-frames (i.e., short term, medium-term and long-term investments). It has solidified the idea that a client's risk tolerance is much more important than age-based risk tolerance, and that I plan to spend more time in client meetings making sure that clients truly understand and accept their overall risk. As a firm, we'll continue looking to do more of the things that have worked for us and less of the things that didn't.

Bottom Line

Fueled by record amounts of stimulus in both monetary and fiscal policy, stocks have continued to move higher in spite of the ongoing economic damage. This disconnect between the economy and the stock market has confounded many analysts due to the fact that there is typically a tight link between the two. And while it’s key to understand the additional dynamics which affect the stock market, this divergence (between the economy and stock market) represents a high degree of risk which continues to warrant a defensive portfolio stance.

As always, I’m honored and humbled that you're devoting time to read what I'm writing and/or given me the opportunity to serve as your financial planner/advisor. If you have any questions or would like to discuss any financial matters, please feel free to give me a call.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first.  If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

Life After COVID-19: Same As it Ever Was?

And you may find yourself
Living in a shotgun shack
And you may find yourself
In another part of the world
And you may find yourself
Behind the wheel of a large automobile
And you may find yourself in a beautiful house
With a beautiful wife
And you may ask yourself, well
How did I get here?

...

Same as it ever was?

 

Once in a Lifetime Song Lyrics by the Talking Heads

 

After weeks of quarantine and “stay at home” orders, we are starting to see encouraging signs of progress in our fight against the COVID-19 pandemic. While we are not out of the woods yet, our collective focus seems to be shifting to what life looks like after COVID-19.

We're all eager to go back to some sense of “normal”, but some experts believe the COVID-19 global pandemic will cause permanent changes in our lives, our psyches, and in the normal way business is conducted in America and around the world. Will we ever go back to the way we were before the virus struck?

Same as it ever was?

Our world could change in many ways beyond our current social distancing and wearing masks in public. Companies large and small are overcoming their reluctance to allow employees to work remotely. Business travel and conferences could become more virtual and less in-person events. Schools from elementary to college have been forced to accelerate online learning capabilities that could change the future of education.

Everyone is becoming more comfortable with virtual meetings, using services like Zoom, Google Meet, GoToMeeting, Slack, and Microsoft Teams for everything from business meetings to exercise classes. Online shopping had already seen rapid growth in recent years, and with physical stores closed, that growth has exploded.

A catastrophe on the scale of the COVID-19 pandemic can also change the psyche in interesting ways. We can see this impact in the people who survived the Great Depression and the rationing during World War II. The most telling residue of those times was people living frugally for the rest of their days, right through a long period of abundance. At the very least, people will have an enhanced appreciation of things we once took for granted.

As we return to some form of “normal,” we need to ask ourselves some important questions. We should think about what our world looks like during this “Great Pause” and use that to make smart decisions about what we want it to look like in the future. Celebrating the 50th anniversary of Earth Day brought plenty of commentary about the benefits of less traffic, smog-free cities around the world, and the return of native wildlife to city streets.

Same as it ever was?

On a more personal level, can YOU take advantage of this incredible opportunity we have been “given” to think more deeply about what you want YOUR life to look like after the pandemic? Maybe jumping right back into the life you had before is not the answer. Perhaps you could make some changes that would improve your life and enable you to live more aligned with your true purpose?

Thinking about questions like these might help as you consider what your life looks like after the pandemic:
1. What brings you joy? What percentage of your time, money, and energy are you putting into people, experiences, work, etc that bring you true joy?
2. What have you truly missed during these past few months? How can you make changes that might enable you to spend more time in these activities?
3. Are there any things you've found you really do not need in your life? We often fill our lives up with so many activities and so much “stuff” that we constantly feel overwhelmed. Maybe some of that “stuff” is not important in the long run.
4. How can you make a real difference in the lives of others that you are close to? Maybe your perspective on this has changed during the pandemic.

While my role as a CPA & Certified Financial Planner is typically focused on the financial side of my clients’ lives, the real reason for addressing these financial issues is to help you live the life you desire. That is the true purpose of financial planning. We help you think through the financial issues, concerns, and questions that you face and assist you in making smart decisions in your financial lives. We all must make choices and trade-offs in our lives, and our role is to help you think through the financial implications of doing that. But the ultimate goal is to help you live the life you desire.

I am here to help you as we all transition to life after the pandemic. All our lives will be different going forward, maybe you can make yours a little better. There is so much that is out of our control in times like these, by focusing on the things that we CAN control we can lead a better life.

Same as it ever was?

Probably not.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first.  If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

Be on the Alert for Coronavirus Scams

The FTC (Federal Trade Commission) has received over 20,000 COVID-19 related complaints since January 1, 2020.

Fraudsters and scam artists are always looking for new ways to prey on consumers. Now they are using the same tactics to take advantage of consumers' heightened financial and health concerns over the coronavirus pandemic. Federal, state, and local law enforcement have begun issuing warnings on the surge of coronavirus scams and how consumers can protect themselves. Here are some of the more prevalent coronavirus scams that consumers need to watch out for.

Schemes related to economic impact payments

The IRS recently issued a warning about various schemes related to economic impact payments that are being sent to taxpayers under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.¹ The IRS warns taxpayers to be aware of scammers who:

• Use words such as "stimulus check" or "stimulus payment" instead of the official term, "economic impact payment"
• Ask you to "sign up" for your economic impact payment check
• Contact you by phone, email, text or social media for verification of personal and/or banking information to receive or speed up your economic impact payment

In most cases, the IRS will deposit the economic impact payment directly into an account that taxpayers previously provided on their tax returns. If taxpayers have previously filed their taxes but not provided direct-deposit information to the IRS, they will be able to provide their banking information online at irs.gov/coronavirus. If the IRS does not have a taxpayer's direct-deposit information, a check will be mailed to the taxpayer's address on file with the IRS. In addition, the IRS is reminding Social Security recipients who normally don't file taxes that no additional action or information is needed on their part to receive the $1,200 economic payment — it will be sent to them automatically.

Fraudulent treatments, vaccinations, and home test kits

The Federal Trade Commission is tracking scam artists who are attempting to sell fraudulent products that claim to treat, prevent, or diagnose COVID-19. Currently, the U.S. Food and Drug Administration (FDA) has not approved any products designed specifically to treat or prevent COVID-19.

The FDA had warned consumers in March to be wary of companies selling unauthorized coronavirus home testing kits. On April 21, 2020, the FDA authorized the first coronavirus test kit for home use. According to the FDA, the test kits will be available to consumers in most states, with a doctor's order, in the coming weeks. You can visit fda.gov for more information.

Phishing scams

Scammers have begun using phishing scams related to the coronavirus pandemic in order to obtain personal and financial information. Phishing scams usually involve unsolicited phone calls, emails, text messages, or fake websites that pose as legitimate organizations and try to convince you to provide personal or financial information. Once scam artists obtain this information, they use it to commit identity or financial theft. Be wary of anyone claiming to be from an official organization, such as the Centers for Disease Control and Prevention or the World Health Organization, or nongovernment websites with domain names that include the words "coronavirus" or "COVID-19," as they are likely to be malicious.

Charity fraud

Many charitable organizations are dedicated to helping those affected by COVID-19. Scammers often pose as legitimate charitable organizations in order to solicit donations from unsuspecting donors. Be wary of charities with names that are similar to more familiar or nationally known organizations. Before donating to a charity, make sure that it is legitimate and never donate cash, gift cards, or funds by wire transfer. The IRS website has a tool to assist you in checking out the status of a charitable organization at irs.gov/charities-and-nonprofits.

Protecting yourself from scams

Fortunately, there are some things you can do to protect yourself from scams, including those related to the coronavirus pandemic:

• Don't click on suspicious or unfamiliar links in emails, text messages, and instant messaging services.
• Don't answer a phone call if you don't recognize the phone number — instead, let it go to voicemail and check later to verify the caller.
• Never download email attachments unless you can verify that the sender is legitimate.
• Keep device and security software up-to-date, maintain strong passwords, and use multi-factor authentication.
• Never share personal or financial information via email, text message, or over the phone.
• If you see a scam related to the coronavirus, be sure to report it to the FTC at ftc.gov/complaint.

If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first.  If you are not a client yet, an initial consultation is complimentary and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client is different, and so is your financial plan and investment objectives.

¹Internal Revenue Service, IR-2020-64, April 2, 2020