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COVID-19 and increased market volatility have led to many new questions from our clients. We care about how this is impacting you—and how we can help. We will continue to be here to provide up-to-date information and answers for what's on your mind.
Visit the COVID-19 Resource Center for Investor Center updates, market insights, and to watch a weekly webinar. Last updated February 18, 2021.
The CARES Act waived RMDs for 2020 for all types of retirement plans including IRAs, 401(k)s, 403(b)s, 457(b)s, and inherited IRA plans. It also allowed anyone who took an RMD between January 1 and August 31, 2020, to return it to their account, as long as it was repaid by August 31, 2020. After August 31, 2020, per IRS rules, you may only return RMDs within 60 days of receiving the withdrawal.
If it's been more than 60 days since you received your RMD, you can no longer roll it back into your account. Note: Distributions from inherited IRAs were not allowed to be returned after August 31, 2020. If you have questions about how this IRS guidance applies to your specific situation, please consult your tax advisor.
If it's been less than 60 days since you received your 2020 RMD, you may be eligible to make a 60-day rollover contribution for your 2020 RMD. Three ways to do this are:
The CARES Act, passed in March of 2020, temporarily waived required minimum distributions (RMDs) for all types of retirement plans (including IRAs, 401(k)s, 403(b)s, 457(b)s, and inherited IRA plans) for calendar year 2020. This included the first RMD, which individuals may have delayed from 2019 until April 1, 2020. That waiver expired in December 2020. If you were taking RMDs before 2020 then you need to begin taking them again in 2021. If you turned 72 in 2020 and didn't turn 70 ½ on or before December 31, 2019, you will need to take an RMD by December 31, 2021. Learn more about required minimum distributions.
It only takes a few minutes to set up automatic withdrawals for your 2021 required minimum distribution (RMD). To get started, visit automatic withdrawals. Select "2021" as the year for your automatic RMD withdrawals to begin.
The COVID-19-related distribution (CRD) provision may apply to IRA distributions taken between January 1, 2020 and December 30, 2020. You may have qualified for a CRD if you were an individual who themselves, or their spouse, or a dependent was diagnosed with COVID-19, or who experienced adverse financial consequences from COVID-19 due to:
You are always able to take money from your IRA. Some withdrawals may be taxable and some may be subject to a 10% early withdrawal penalty. If you are over age 59½, you aren't subject to a 10% early withdrawal penalty.
The CARES Act established some special tax rules for qualifying 2020 coronavirus distributions taken between January 1, 2020 and December 31, 2020. These special tax rules do not apply for 2021 distributions.
COVID-19-related distributions (CRDs) from an inherited IRA may not be rolled over, with an exception for a spousal beneficiary which allows the distribution to be rolled over to the spouse's own IRA within 3 years.
Recipients of CRDs from inherited IRAs may choose to report this taxable income evenly across tax years 2020, 2021, and 2022, or pay tax in full when completing their 2020 tax filing. You will need to complete IRS Form 8915-E and file it with your taxes.
The 10% early withdrawal penalty was waived for qualified COVID-19-related distributions (CRDs). You will need to complete IRS Form 8915-E and file it with your taxes.
If you took a CARES Act withdrawal from your workplace savings plan from January 1, 2020 through December 30, 2020, you'll need to fill out IRS Form 8915-E, complete it, and submit it with your tax return. The form includes the 10% early withdrawal waiver, the option to spread the taxable amount over 3 years, and the option to repay CARES Act withdrawals.
Fidelity does not track whether your withdrawal qualifies to be a COVID-19 related distribution. We report distributions for those under 59 ½ as code 1 in box 7 on the 1099-R tax form. You can reconcile this in your tax filing with the IRS. You will need to complete IRS Form 8915-E and file it with your taxes.
Recipients of qualified CRDs may choose to report this taxable income evenly across tax years 2020, 2021, and 2022, or pay the tax in full when completing their 2020 tax filing. You will need to complete IRS Form 8915-E and file it with your taxes.
Fidelity will issue only one 1099-R for 2020 to report a COVID-19-related distribution (CRD). Repayments are reported by Fidelity on line 2 of corresponding tax form 5498. You will get a current 5498 tax form each year that shows the amount you rolled back in for that year. You can reconcile this by using your 2020 tax year 1099-R and subsequent 5498 forms from Fidelity, along with IRS Form 8915-E, which can be found at irs.gov.
A 1099-R tax form will be issued for each IRA that has a COVID-19-related distribution (CRD). If there are several distributions from an IRA, one 1099-R will be issued for all. A 5498 tax form will also be generated as a result of your repayment. Instructions for reporting COVID-19-related distributions (CRDs) can be found in IRS Publication 590-B instructions and IRS Notice 2020-50, which can be found at irs.gov. Talk to your accountant or tax advisor on how to reconcile this distribution with your 1099-R and tax form 5498.
Taking a CRD in 2020 and paying it back in 2022, as well as several other scenarios, may require an amended tax return. Please refer to IRS Notice 2020-50, instructions for IRS Form 1040, and IRS Form 8915-E, which can be found at irs.gov. Talk to your accountant or tax advisor on how to reconcile this distribution in your tax filing.
For additional information on CRDs, see IRS Notice 2020-50, instructions for IRS Form 1040, or IRS Form 8915-E, which can be found at irs.gov. Or talk to your accountant or tax advisor.
On March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law, the third in a series of economic relief bills in response to the COVID-19 pandemic. The more than $2 trillion package seeks to address financial pressures facing individuals, businesses, and state and local governments due to the pandemic. The law also provides emergency funding for hospitals, testing, and vaccine development. Find out more about the stimulus and the CARES Act and what it may mean for you.
There are no stipulations on how you spend your CARES Act payment. You may use any money you receive however you choose.
Like IRAs, the CARES Act temporarily waives required minimum distributions (RMDs) for qualified deferred annuities. This includes the first RMD, which individuals may have delayed from 2019 until April 1, 2020. The CARES Act does not apply to non-qualified deferred annuities.
The CARES Act extension suspends payments and interest on federal student loans through September 30, 2021. The act waives interest on the loans as well. For borrowers participating in a loan forgiveness program, the missed months of payments will be recorded as if the borrower had made the payments. Borrowers who are unsure if their loans qualify should contact their loan servicer. Many student loan servicers are putting recurring payments on hold, so borrowers should contact their loan servicer for details on how payments are impacted.
You can use your health savings account (HSA) to pay health insurance premiums if you're currently collecting federal or state unemployment benefits, or to pay premiums for COBRA health insurance that you receive because your job status changed.
The list of eligible expenses for health savings account (HSA) spending has been permanently expanded to include over-the-counter medications, including antacids, pain relievers, and treatments for cold, flu, and allergy symptoms (without a prescription), and menstrual care products.
Testing: The recent COVID-19 relief legislation requires that diagnostic testing of COVID-19 be covered at no cost to participants enrolled in health savings account (HSA)-eligible health plans. Diagnostic testing coverage will be available until the public health emergency related to COVID-19 has passed. The legislation also requires that coronavirus preventive services and vaccines be covered without co-payment. Coverage for the vaccine will be available within 15 business days after being recommended by the government.
Treatment: Guidance from the Internal Revenue Service (IRS) also allows HSA-eligible health plans to cover treatment for COVID-19 before the deductible is met. This guidance allows full coverage for treatment, but does not require it. Check with your health insurance provider for details on your coverage.
Loans and withdrawals from workplace savings plans (such as a 401(k), 403(b), etc) are different ways to take money out of your plan. A loan lets you borrow money from your retirement savings and pay it back to yourself over time, with interest—the loan payments and interest go back into your account. A withdrawal permanently removes money from your retirement savings, and you'll have to pay taxes and possible penalties. If your plan allows, you might be able to take money out of your retirement savings.
If your retirement plan is with Fidelity, log in to NetBenefits® to view your options.
If you took a CARES Act withdrawal from your workplace savings plan from January 1, 2020 through December 30, 2020, you'll need to fill out IRS Form 8915-E, complete it, and submit it with your tax return. The form includes the 10% early withdrawal waiver, the option to spread the taxable amount over 3 years, and the option to repay CARES Act withdrawals.
If your plan allows, you might be able to borrow from your workplace savings plan (such as 401(k), 403(b), etc). There might be limits based on regulations and your plan's rules.
If your retirement plan is with Fidelity, log in to NetBenefits® to view your options.
Due to the global COVID-19 pandemic, mail service to certain international jurisdictions1 has been temporarily suspended, and some important documents2 such as account statements, trade confirmations, tax forms and prospectuses aren’t being delivered as they normally would.
To ensure you receive your documents, Fidelity recommends that all customers sign up for electronic delivery. Change your delivery preferences
You may receive an email or telephone call from Fidelity to encourage electronic delivery, and we may attempt to deliver certain documents electronically in accordance with confidentiality requirements. If you live in an impacted country and either (1) you don't consent to electronic delivery or (2) we can't deliver the impacted mailings electronically, we'll temporarily hold these items and will take reasonable steps to physically mail them within 7 days of mail service resuming in your country.
Mail delays may also impact your ability to receive physical checks. To avoid waiting for delivery services to resume, consider adding a feature such as Money Line or Bank Wire to your account.
As you think about whether to stay in cash or to invest, think about the role cash plays in your overall financial plan. How much do you need to pay for your expenses, both planned and unexpected? Holding significant amounts of cash may provide reassurance amid market volatility, but leaving overly large amounts of cash uninvested in your portfolio can be a drawback over the long term.
To learn more, read our article about understanding how to manage your cash.
You can change or delete an automatic contribution at any time. First, visit our automatic transfers and investments page, then select the retirement account you'd like to edit and save your changes.
To get started, visit automatic transfers and investmentsLog In Required.
For clients who are retired or near retirement with a diversified investment plan, staying partially or fully invested (and not moving to cash) is often the right decision, especially for those planning to enjoy a healthy and long retirement which could last 20 to 30+ years.
Consider working with a financial professional who can help you create a disciplined investment and income plan that suits your individual goals, risk tolerance, and life situation.
Even when the stock market ride gets bumpy, Fidelity reminds long-term investors to stick to their plan—to maintain a well-diversified portfolio (which reflects an asset mix appropriate for your financial circumstances) and continue to save and to invest those additional savings.
Consider working with a financial professional who can help you create a disciplined investment plan that suits your individual goals, risk tolerance, and life situation.
Fidelity offers access to tools and resources that can help with your estate planning needs, such as creating a will, choosing a health care proxy, or establishing a power of attorney. You can get started by using the Fidelity Estate Planner®, our free online service for Fidelity customers that helps guide you through the estate planning process and, if needed, connect you with an attorney. Or, for simple family situations (with less than $2 million in assets), another option you may want to consider is LegalZoom®, where Fidelity customers can save on online estate planning services.
Refinancing involves taking out a private loan to pay off all or a portion of your student loans, typically at a lower interest rate (if you qualify), which could result in significant savings. It also lets you extend the term from, say, 10 to 20 years. Keep in mind, though, you could end up paying more over a longer term. And, your new private loan disqualifies you from federal benefits such as a broad choice of repayment plans. Our student debt tool can help you explore options to pay off your debt. If you decide refinancing fits your situation, an option that lets you easily compare rates from multiple lenders is Credible, through which Fidelity customers can save on refinancing student loans.
One useful resource to consider is Collegewise, including its COVID-19 Resource Center, where you'll find an up-to-date listing of all closed campuses, affected campus visit programs, and schools extending their deposit deadlines, as well as updates on entrance exam testing dates, and other useful information. Fidelity customers can save on services from Collegewise, including personal support from professional college admissions counselors.
The Federal Trade Commission and IRS have reported a wide range of financial fraud schemes related to COVID-19. To help protect yourself, you may want to consider an online account monitoring service. One option available is EverSafe, which sends suspicious-activity alerts for unusual withdrawals, missing deposits, odd charges, and changes in spending patterns. This may be particularly useful if you're caring for elders, as older adults may be prime targets for financial fraud. Another option to consider is IDnotifyTM from Experian, which offers monitoring services to help protect you from identity theft. Fidelity customers can save on services from EverSafe and IDnotify.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Diversification and asset allocation do not ensure a profit or guarantee against loss.
Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.
The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at IRS.gov. You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676.
The Fidelity Estate Planner is not an attorney referral service. When applicable, participating attorneys, or their respective law firms, have not paid a fee or compensation to be included or listed in the Fidelity Estate Planner, nor does Fidelity receive any fee or compensation for providing the law firm and attorney contact information to its customers.
Fidelity does not recommend or endorse any law firm or attorney listed in the Fidelity Estate Planner. Fidelity is not assessing your legal needs or providing legal advice in the Fidelity Estate Planner. There is no requirement that you select any of the law firms or attorneys in the list. You are free to select any law firm or attorney of your choice. The Fidelity Estate Planner is educational in nature and is not intended to serve as the primary basis of your estate and/or tax planning decisions.
LegalZoom.com. ("LegalZoom") is not affiliated with Fidelity Brokerage Services LLC or any of its affiliates. LegalZoom is solely responsible for the information and services it provides. Fidelity is not involved in the preparation or delivery of the information or services provided by LegalZoom via its website or otherwise does not guarantee or assume any responsibility for such information or services and disclaims any liability arising from your use of such information or service. Fidelity receives compensation as a result of your engagement with LegalZoom through the link on Fidelity.com.
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