I’m really happy that clients and other friends of Keen Wealth have continued to ask us questions about their financial planning over the past month or so. Those questions tell me that even as we’re dealing with all of the uncontrollable stresses surrounding the COVID-19 pandemic, folks are keeping at least one eye on the things they can control. There is still business to be conducted, bills and taxes to pay, and both short and long-term plans to make. And as an essential business, Keen Wealth has been able to make a smooth transition to our new health and safety realities so that we can stay available to our clients when they need us the most.
On today’s show, we go back to the mailbag to answer some questions we’ve received lately about oil prices, 2019 tax deadlines, and how the 2020 CARES Act affects the 2019 SECURE Act.
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1. Why was the price of oil in negative territory?
Imagine a tugboat that’s pulling a long chain of barges. If the boat suddenly stops, forward momentum will cause all of those barges to pile up on top of each other.
In the case of oil, demand for things like gasoline and airplane fuel is the tugboat, and the barges that are piling up represent oil producers, refineries, and storage facilities.
In a typical recession environment, demand would have slowed gradually, and oil producers would have had time to slow down as well. But social distancing slowed demand almost all at once. As oil market speculators watched the value of their futures contracts drop and storage facilities ran out of room, the markets were valuing oil futures negatively – essentially offering to pay someone else to store all that excess oil.
Once communities and businesses begin to reopen, that tugboat of demand is going to start picking up steam again and pull oil prices back up with it. In the meantime, enjoy cheap tanks of gas when you’re making your weekly shopping run.
2. Since July 15th is the new deadline for filing taxes, can I still make 2019 contributions into my IRA?
Yes! The deadline for making annual IRA contributions is Tax Day of the following year, and for 2019 that’s July 15th. If you’ve already filed your taxes, talk to your custodian or fiduciary advisor about the best way to make additional 2019 contributions, including how to go about amending your 2019 tax return.
Of course, if you’re a client of Keen Wealth who wants to top off 2019 contributions, call us up and we’ll be happy to handle the details for you.
3. How does the CARES Act affect new rules made by the SECURE Act?
First, let’s make sure we’ve got our Acts straight:
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law at the end of 2019. We have some really informative content on the Keen on Retirement website about the most significant parts of that law. One noteworthy change was that the SECURE Act pushed out the age at which you have to start taking required minimum distributions (RMDs) from retirement accounts from 70 ½ to 72.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed at the end of March 2020 to help businesses and individuals during the pandemic. As part of its aid and stimulus packages the CARES Act eliminated RMDs for 2020, no matter how old you are. And if you withdrew from an IRA in 2020 before the pandemic hit, the IRS doesn’t consider that withdrawal an RMD. If you don’t need that money to pay your bills you could roll it back into your IRA or could even consider converting it to a Roth IRA. Definitely check with your advisor to see if this makes sense for you and also confirm that you are within the acceptable allowable time frames to make these moves.
As we discuss in this episode, the additional flexibility the CARES Act gives retirees for 2020 has some important nuances that you’ll want to discuss with your fiduciary advisor.
We hope you and your family are doing well and staying safe under these difficult circumstances. We’re always here to answer any questions about how the pandemic is affecting markets or your finances.
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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