2020 Planning Checklist

The world has changed dramatically in 2020 so it’s a good time to revisit your financial planning.  There have been three major tax laws enacted over the past several months and many people’s income will look very different this year. It’s also a good time to revisit your retirement plan and estate plan.  And Michiganders have major changes to auto insurance beginning this month.

2020 Planning Checklist

Balance Sheet Planning:

  • Review emergency fund and cash reserves amid job uncertainty – target at least 3-6 months of expenses.
  • Consider refinancing your mortgage as rates have dropped significantly.

Tax Planning:

  • Consider skipping 2020 Required Minimum Distributions (RMDs), as many have been waived.
  • Consider Roth IRA conversions in lieu of RMDs for better long-term tax optimization.
  • Review COVID-related distribution options to avoid the 10% early withdrawal penalty if retirement funds need to be accessed early.
  • 2020 may be a low-income year for many taxpayers. Consider taking income at a lower tax rate this year from capital gains, Roth conversions, or distributions from inherited IRAs post-SECURE Act.
  • Review portfolio for tax loss harvesting opportunities.

Estate Planning:

  • Review estate planning documents amid the pandemic, ensuring all are up-to-date and that wishes are met.
  • Update beneficiaries as needed and look at retirement account beneficiaries now that the SECURE Act is law.
  • Review any Trust listed as a beneficiary on a retirement account.

Retirement Planning:

  • Review withdrawal rate for sustainability amid market losses and today’s very low interest rates.
  • Re-evaluate Social Security filing strategy and consider adjusting based on income needs, life expectancy, and anticipated returns.
  • Push up retirement savings contributions, if possible, especially if employers cut or suspend your match.

Insurance Planning:

  • Review life insurance needs and how much of your life insurance is tied to your employer.
  • Max out Health Savings Accounts, if eligible.
  • Consider a Flexible Spending Account, as uses for these funds have been expanded.
  • Michiganders should review their auto insurance.

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