Many parents are wondering if they should get a Florida Prepaid Plan or another type of savings plan for their children’s college education. The enrollment period is from February 1 through April 30, so now is the time to consider planning ahead and deciding which type of college savings plan is best for you.

So, should you get a 529? Should you get Florida Prepaid? What are the major factors in funding your child’s education?

What Is the Florida Prepaid Plan? 

The traditional Florida Prepaid Plan allows you to lock in tuition rates for any Florida public university or college and can be applied to a private college, a community college, a state school, or a state university. You can also choose a combination of two, as some students may start at a community college and then transfer to a university.

Protection for Increased College Tuition

With the Florida Prepaid Plan, you’re prepaying your child’s college education at a presumably discounted rate (assuming tuition costs rise between now and the time your child attends college). This shields you from having to worry about college tuition rates going up, which have traditionally increased at a rate from 5-8% depending on the time period. The Florida Prepaid plan offers a “win-win” scenario–no matter what the cost of your child’s college is in the future, it guarantees you a refund if it costs less, or to cover the difference if it costs more.

What Are the Florida Prepaid Rates?

How much you pay into the plan is calculated every year before the enrollment window opens. In 2024, Florida Prepaid reduced its monthly prices by up to 25% for the program’s 35-year anniversary. This is the lowest Florida Prepaid prices have been in ten years.

Paying for the Florida Prepaid Plan

You can pay for a Florida Prepaid plan 1) in a lump sum, 2) over a 5-year period, or 3) in monthly installments through high school graduation. They offer the following plans, some of which also include the option to add a 1-Year Dormitory Plan:

• 2-Year Florida College Plan: Earn an associate’s degree (AA) or trade certificate from a state college.
• 4-Year Florida College Plan: Earn a bachelor’s degree (BA) from a state college.
• 2 + 2 Florida Plan: Earn an AA at a state college and guaranteed admission into a state university.
• 1-Year Florida University Plan: Pay for one year of state university at a time, for up to four years.
• 4-Year Florida University Plan: Earn a bachelor’s degree from a state university.

Florida Prepaid Refunds

For those who already have the Florida Prepaid program, it’s a good idea to keep an eye out on the Florida Prepaid website. Florida Prepaid is continually re-evaluating the cost of tuition and gives refunds when it finds that tuition hasn’t increased as much as the company had anticipated.

What About the Florida 529 Savings Plan? 

An alternative to the 529 Prepaid plan is the 529 savings plan. This plan allows you to invest in a tax-favored manner for education funding. The plans are offered by various mutual funds or insurance companies in conjunction with participating states. Residents in a state that has a state tax typically are lured to their own state-sponsored plan for the potential to get tax-favored investments at the state tax level as well. In Florida, where there is no state tax, residents have merely picked the plan of any state they feel is the best plan. While historically Florida did not have a very competitive plan relative to other states, the Board of Education and Florida leadership has revamped the Florida 529 Savings Plan, making it competitive with other state plans.

What 529 Savings Plan Does AllGen Recommend?

AllGen’s financial advisors historically recommended 529 savings plans from out-of-state instead of the Florida savings plan to Florida residents. However, with the recent improvements, the Florida 529 savings plan is now very competitive and has low fees, good fund choices, and good flexibility. It’s important to point out that you can have both a Florida Prepaid Plan and a Florida 529 Savings Plan. 

What Happens If My Child Has a Florida Prepaid Plan and Bright Futures Scholarship? 

Most universities will use the Florida Prepaid Plan funding first, for tuition expenses. Florida Prepaid doesn’t cover things like transportation, lab fees, or books, but those expenses can be paid for with a student’s Bright Futures Scholarship. If there is anything left over from the scholarship, it can be deposited into the student’s account for housing or other living expenses.

What Are The Differences Between Florida Prepaid Plans and Bright Futures Scholarships? 

Florida Prepaid Plans are applicable to most colleges, both in-state and out-of-state, whereas Bright Futures Scholarship is only applicable to in-state colleges. Bright Futures works with both public and private Florida universities; however, the amount paid for private universities will be calculated based on credit hours so it is unlikely to cover private college tuition in full.

Does My Child Need To Be a Florida Resident?

If you open a Florida Prepaid Plan and then move out of state, you can keep your Florida Prepaid Plan. You only have to live in the state of Florida when you open the plan. However, a student must be a Florida resident to receive a Bright Futures Scholarship and can only use the scholarship by attending a Florida college.

What Is Covered by the Florida Prepaid Plans and Bright Futures Scholarships?

Most Florida Prepaid Plans don’t cover much other than tuition. There are add-ons that do cover basic housing costs as well.  Depending on the year that you signed up, you can find more information about what your plan covers here. In contrast, Bright Futures Scholarships can be used for a variety of college expenses, including housing, books, and lab fees. Both Florida Prepaid and Bright Futures can be used during summer semesters.

What Happens If My Child Doesn’t Go to College?

If your child doesn’t go to college, you still have several different options. You can transfer the funds to a different family member and keep those rates going. Also, if they don’t go to school immediately, they have ten years to use it from the expected high school graduation date. The last recourse is to actually cancel the plan. You can cancel the plan and get a full refund of everything that you put in, except for a $50 administrative fee. 

Keep in mind that your refund is only for the amount you put in, there’s no growth. This is why it may be better to leave the funds in the Florida Prepaid account and see if the child goes to college later. Alternatively, you can transfer it to another family member.

Should I Choose Florida Prepaid? 

The real answer is that it depends.

It depends on the age of your child and your risk tolerance, among many other factors. Developing the right strategy is very important as there are multiple variables to consider. The younger your child, the more the 529 savings may make sense, as the longer time period can mitigate some of the associated market volatility. You must also consider your personal risk tolerance as well, as there is a big difference between locking in a rate guaranteed by the state of Florida rather than looking for greater returns, not guaranteed, via equity investments.

If you cannot choose and your budget allows, you can also do both. Primarily, you must be in the appropriate financial stage of life to increase the odds of this or any savings plan succeeding.

Financial Life Stages

Parents have an innate desire to care for their children and support them by doing things like paying for college, which is a great thing. However, sometimes things get out of order when you’re doing your finances.

At AllGen, we teach three financial life stages: Foundation, Formation, and Freedom.

The Foundation Stage 

In the Foundation stage, you might be working to get your consumer debt paid off. You’re also building up critical emergency reserves. You need to have a strong Foundation before you can get into the Formation stage and take the next financial steps. 

The Formation Stage 

Saving for your child’s college education is something that should be done in the Formation stage. Although parents want to start paying for their children’s education, it’s important to prioritize your Financial Foundation before you start a college fund. If you already have your consumer debt paid off and an emergency fund in place, you are free to use any additional funds to start saving for a college education.

We hope this helps you think about how to fund college education for your children. We invite you to come in and speak with one of our Financial Advisors. Our aim is to assist you in understanding your available options and to discuss what would be most beneficial for you and your circumstances. Reach out to us any time; we’re here to serve.

For more information, watch our full Florida Prepaid video below.

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

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If you’re feeling unsure about what to do on your Path to Financial Freedom, be sure to speak with your AllGen Advisor.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post The 5 BIGGEST Mistakes On Your Path To Financial Freedom! appeared first on AllGen Financial Advisors, Inc..

If you’re feeling unsure about what to do with your investments, be sure to speak with your AllGen Advisor.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

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You can find more information about your second stimulus check via the IRS website here: https://www.irs.gov/coronavirus/get-my-payment 

If you’re feeling unsure about what to do with your third stimulus check, be sure to speak with your AllGen Advisor.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post Your Third Stimulus Check: What You Need To Know appeared first on AllGen Financial Advisors, Inc..

If you’re feeling unsure about what to do with your second stimulus check, be sure to speak with your AllGen Advisor.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

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Click here to go straight to the video.

Find Out Where Your Money Is Held

The first step is to figure out exactly where the funds in your 401(k) account are currently being held. To find out, look at your 401(k) statement, either online or on a paper statement if you receive them in the mail. On the statement, you’ll see a company name, such as Fidelity or Vanguard. This is the name of the company where your money is actually being held, called the custodian.

Open Up an IRA

The next step is to open up a new IRA account if you don’t already have one. You can go to a financial institution such as Charles Schwab or Fidelity and open an account. Make sure you get your account number. The company where you open up the IRA account does not need to be the same company that currently holds your 401(k) funds.

Contact the Company Holding Your 401(k)

Next, contact the company that is currently holding your 401(k) funds. If it’s a larger company, you should be able to call the phone number provided on your statement. The number may also be available via Google. You can then inform the company that you want to rollover your 401(k) into an IRA. They’ll take you through the necessary steps.

If it’s a smaller company or a government agency that holds your money, you may need to contact your former employer’s benefits department or HR department. There will be some paperwork that you will have to fill out to indicate that you want to rollover your 401(k) to your IRA.

Receive the Funds

The company holding your 401(k) funds will ask how you want to receive the funds. The easiest way to get the funds is to have the 401(k) custodian make out a check to the IRA custodian for your benefit. You’ll need to provide the account number of your IRA at that time. To learn more about custodians, click here.

The 401(k) custodian will then send out a check for the amount you had in your 401(k). The check may be sent to you, in which case you would need to send it to your IRA custodian for deposit into your IRA. Often, however, the check may be sent directly to the company holding your IRA.

Staying Compliant

The 401(k) custodian will ask if you have received a special tax notice. This special tax notice covers all of the different decisions you can make and the tax ramifications of each one. For compliance reasons, the custodian must ask if you have received it and cannot move forward with the rollover process until you have either confirmed receipt or waived receiving the special tax notice.

Rolling over 401(k) funds to an IRA bears no tax consequences because both accounts are qualified. Funds in either type of account won’t be taxed until they’re taken out of the account as a distribution. The original custodian will sell the funds in your 401(k) account and send the cash either to you or to the new custodian for deposit into your IRA.

Watch the video below, or visit our 401(k) Rollover FAQ page.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post 401k Rollover Series: How Do I Rollover My 401(k) into an IRA? (Part 1: Basic Rollover) appeared first on AllGen Financial Advisors, Inc..

In this video, Paul discussing the pros and cons of rolling over your 401k with your new employer vs moving it to your personal IRA.

This is the second video in our 401(k) Rollover Series. You can watch our first video here.

Watch the video below, or visit our 401(k) Rollover FAQ page.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post 401k Rollover Series: Should I Rollover With New Employer Or Move To IRA? appeared first on AllGen Financial Advisors, Inc..

In this video, Paul provides an overview of 4 options you have with a 401(k) from a previous employer:

1. You can do nothing.
2. You can take a distribution. Typically, there is a 10% fee if you’re under 59.5 years old, but this fee has been temporarily waived due to COVID-19.
3. You can transfer your 401(k) to a new employer.
4. You can rollover your 401(k) into an IRA.

Watch the video below, or visit our 401(k) Rollover FAQ page.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post What Should I Do With My 401(k) From My Previous Employer? appeared first on AllGen Financial Advisors, Inc..

Click here to go straight to the video.

Who Gets the Coronavirus Stimulus Check?

Anyone who makes an AGI (adjusted gross income) under the income cap on their 2019 tax return (or 2018 if 2019 taxes have not yet been filed) will receive the full amount of $1,200. These income limits are:

1. $75,000 for a single person filing taxes individually
2. $112,000 for a head of household
3. $150,000 for a married couple without children filing jointly

If you’re a family below this income cap, you will also receive an additional $500 for each child under the age of 16. If you’re a family above this income cap, it’s currently unclear whether you will receive the additional $500 per child.

If your income is above this threshold, you will receive $5 less for every $100 that your income is above the threshold. This means that anyone making less than these amounts will still receive a stimulus check:

1. $99,000 for a single person filing taxes individually
2. $146,000 for a head of household
3. $198,000 for a married couple without children filing jointly

It is only over these thresholds that you would no longer qualify for any amount at all.

For more information on the coronavirus stimulus package terms, be sure to visit our last #MoneyMinute blog: What Is the Coronavirus Stimulus Package and How Does It Affect Me?

What Should I Do With My Stimulus Check?

If you qualify to receive the stimulus check, AllGen’s position is that what you do with it depends on where you are on your Path to Financial Freedom.

You may need that money today to survive. You may have lost your job or your income may have decreased. That money may be necessary to pay rent or other essential bills. If you need the money immediately to cover essentials necessary to survive, then, of course, you should use your stimulus money for that.

However, if you’re in a better financial position, if you still have income because your job allows you to work from home and can pay your monthly expenses, but perhaps you haven’t established an emergency reserve fund – now is a great time to do so.

Create an Emergency Fund

An emergency fund should be three to six months of living expenses unless you have consumer debt. If you haven’t already begun saving for one, the stimulus check can be a great way to kickstart that emergency fund. If you already have an emergency fund, you could instead look at what consumer debt you have.

Pay Down Consumer Debt

If you have debt, the stimulus check is a great way to start getting rid of that high interest consumer debt. Anything that is charging interest against you is not financially healthy for your financial portfolio. You could use the stimulus money to either eliminate the balance on a credit card or even just put a dent in the amount you owe in order to free up some cash flow.

If you can pay off debt, you won’t have that monthly payment to worry about anymore. That will free up some cash, which is a much healthier situation to be in.

Invest and Grow Your Net Worth

If you already have your monthly expenses covered, you have an emergency fund, and you don’t have consumer debt to worry about, you can start on the Formation stage of AllGen’s Path to Financial Freedom. This involves investing and growing your net worth and your wealth in general.

If you’ve started investing, this stimulus check is a great way to put additional money toward your investments. If you haven’t already started investing, you can use the money to jumpstart your investment portfolio and grow your wealth.

Donate to Someone in Need

Some people who are in a position to do so have used some of their stimulus money for themselves and then donated the rest to a family that needed it. At AllGen, we are always very supportive of being generous and helping out someone in need. But whatever you do with your money, it’s important to be prudent with it.

If you’re feeling unsure about what to do with your stimulus check, be sure to speak with your AllGen Advisor.

Don’t let current conditions keep you up at night. Obsessing over the market is what we do! 

Give us a call if you have any questions. We’re here to serve.

407-210-3888

Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.​

The post What Should I Do with My Coronavirus Stimulus Check? appeared first on AllGen Financial Advisors, Inc..

Many are wondering how the stimulus package will affect them and whether they qualify for a stimulus check. While the CARES Act has a lot of components to it, there are three major areas that it focuses on: assistance to individuals, loans for small businesses, and tax credits for small businesses.

Click here to go straight to the video.

Assistance to Individuals

Stimulus Check

Qualified Americans will receive a stimulus check from the government. The amount each person receives is based on 2019 tax returns if you have already filed and 2018 tax returns if you have not. Single adults with an income of less than $75,000 will receive a check for $1,200 and married couples who filed jointly with a combined income of less than $150,000 will receive $2,400. There is also a $500 payment for each child under the age of 16.

Single adults who make more than $99,000 and married couples who make more than $198,000 combined are not eligible for the stimulus check. However, they may still qualify to receive the $500 per child under 16. Anyone on social security or disability also qualifies for the check, provided all income requirements are still met. Americans living abroad also qualify provided income requirements are met and their social security numbers are valid.

If you make more than $75,000 and less than $99,000 as an individual or more than $150,000 but less than $198,000 as a jointly filing married couple, you won’t qualify for the full $1,200 or $2,400 check, but you will still receive a check. However, the amount received will decrease by $5 for each $100 that your income exceeds the stated limit.

Changes to Unemployment Benefits

Unemployment benefits across the nation have been changed in response to the coronavirus. Many Americans across the country are facing unemployment as businesses have closed due to quarantine rules and to help slow the spread of the virus. In many states, qualifications for unemployment have been changed and unemployment payments have been increased. However, unemployment benefits are on a state-by-state basis, so it’s important to check your individual state’s unemployment website for more details.

In Florida, the maximum unemployment benefits are $275 per week for up to a twelve-week period. The stimulus package adds $600 maximum per week for up to four months from the federal government. Even though this $600 is from the federal rather than state government, workers applying for unemployment benefits apply for through the state and receive the benefits on top of and along with their state unemployment benefits.

The coronavirus has also increased the types of employees that qualify for unemployment benefits. Previously, part-time, furloughed and freelance workers didn’t qualify, but can now apply for unemployment benefits. In addition, the Florida governor has waived waiting periods and online work registration requirements.

In Florida, due to a high volume of applications on the website, the Florida Department of Economic Opportunity is now offering paper applications. For those who are having difficulty applying online for any reason, they are encouraged to print a paper application form and mail it in. Paper application forms are also available in boxes across the state, placed in front of offices such as that of Senator Linda Stewart and CareerSource Florida locations.

Changes to Student Loan Repayments

Federal student loans have been placed into an automatic administrative forbearance. This means that payments for student loans stopped on March 13, 2020, and will remain stopped until September 30, 2020. During this time, no interest will be accrued on the loan. If you are able to make payments, you are still able to do so if you choose.

The eligible loans are Direct Loans, FFEL Program loans, and Federal Perkins loans. Loans that are owned by commercial lenders or by academic institutions aren’t eligible for the payment freeze. If your loans are through the U.S. Department of Education (ED), then you don’t have to do anything in order to start the period of non-payment. The ED will stop any automatic payments and recalculate all loans to reflect the period of 0% interest.

If your loans are through a commercial lender or an academic institution, you will have to check with your loan provider to determine what the relief options may be available to you.

Extended Tax Return and Payment Deadline

The IRS has extended the deadline for tax return filing and payment to July 15, 2020. Typically, when applying for an extension on filing tax returns, the extension applies only to the filing and not to the payment if taxes are owed, which would accrue interest until paid. With this extension, payment is also extended to July 15, 2020. This extension applies to any taxes typically due on April 15, including both annual and first-quarter taxes.

Changes to Retirement Plan Withdrawals

Normally, if you withdraw money from your retirement account before you reach the age of 59½, you are charged a 10% penalty. However, part of the COVID-19 stimulus package allowed for penalty-free withdrawals up to $100,000 for qualifying individuals. In order to qualify, your retirement account must allow hardship withdrawal and you, your spouse, or a dependent must have contracted the COVID-19 virus or you must have been financially impacted by the pandemic due to:

• Quarantine
• Lay-offs
• Reduced hours
• Furlough
• Being unable to work due to a lack of childcare

The distribution is for three years, which means that you have three years to repay the money withdrawn and to pay the taxes on that money. In addition, the repayments don’t count towards any annual limits on contributions.

Assistance to Small Businesses

Loans to Small Businesses

In order to help sustain the economy and keep small businesses afloat during the pandemic, the CARES Act has made businesses impacted by the virus eligible for certain types of loans with the Small Business Administration (SBA). Some of these loans must be repaid, while others may be forgivable loans or grants.

These loans are designed to work in tandem with each other, so businesses can apply for multiple loans or forms of relief. Each one provides relief for a different function of the business, focusing on revenue, payroll, and debt.

Economic Injury Disaster Loan

The Economic Injury Disaster Loan, or EIDL, is a type of loan through the SBA that is available for small businesses experiencing a loss of revenue due to the coronavirus pandemic. Businesses can apply for up to $2,000,000, which includes up to a $10,000 advance, supposedly to be paid out within three days of application. The advance amount is $1,000 per employee up to $10,000. But be forewarned that as of the posting of this blog many applicants have declared that they are not seeing the immediate advance. The $10,000 portion of the loan does not have to be repaid.

Paycheck Protection Program

The Paycheck Protection Program, or PPP, is an SBA program that helps small businesses pay their employees during the coronavirus pandemic. This loan could be forgiven so long as the money is used to keep employees on payroll for eight weeks after approval, rent, utilities, and mortgage interest. At least 75% of the funds must be used for payroll. This program is available for businesses from April 3, 2020, to June 30, 2020.

Forgiveness of the loan is based on the business maintaining current staff levels and maintaining current salaries within 20% of pre-approval amounts. If employees are laid off or have their salaries reduced by more than 20%, the business will have to pay back the loan, either in part or in full. If the loan must be repaid, the business has six months of deferred payment, two years to loan maturity and a 1% interest rate.

Small Business Debt Relief

The SBA also has a debt relief program to help small businesses. For businesses with current 7(a), 504, or microloans, the SBA will pay the principal, fees, and interest automatically up to six months. The SBA will also make automatic payments in principal, fees, and interest for new loans that are taken out prior to September 27, 2020.

The SBA is also offering deferrals on current disaster relief loans. This means that while payments are stopped until December 31, 2020, interest still accrues and the SBA will not automatically stop payments. If your business has automatic payments set up, it is your responsibility to cancel the payment, which will then need to be reestablished after the deferral period. Businesses able and wanting to make payments can continue to do so.

Tax Credits

In addition to loans, the COVID-19 legislation also provides tax credits to businesses. On top of an extended tax filing and payment deadline, businesses can earn tax credits for payroll and for providing paid sick and family leave to employees.

Employee Retention Credit

Businesses that were forced to close due to the pandemic may be eligible to receive tax credits for keeping their employees on the payroll during this time. To qualify, businesses must be either partially or fully suspended by government order during the quarter. The business must also have gross receipts of 50% of those of the same quarter from 2019.

The amount in tax credit is calculated at 50% of qualifying wages up to a total of $10,000. Qualifying wages are based on the number of total employees. For businesses that employ fewer than 100 people, the credit is based on all employees’ wages. For businesses employing 100 or more people, the credit is based on the wages of only employees that didn’t work during the quarter. Please note you can either receive the PPP or the Tax Credit, but not both.

Paid Leave Tax Credit

Businesses that have fewer than 500 employees may be eligible to receive credit for any paid sick and family leave they offer to employees that need to either care for a relative or to take care of their own health due to COVID-19. Under the Families First Coronavirus Response Act (FFCRA), a separate bill from the CARES Act, businesses can collect tax credits for paid sick and family leave calculated based on their expenses that are allocated to that paid leave and the employer’s share of the Medicare tax on that paid leave.

COVID-19 Economic Relief Changing

It’s important to pay attention to any changes to legislation that may occur. A stimulus package the size of the COVID-19 package would typically take months or even more than a year to draft, review, refine, and enact. This legislation was passed within about a week and a half. This means that changes may be made as the bill is actually enacted in order to respond to needs that may come up.

Before making any financial decisions, keep an eye out for changes that may affect you and speak with your financial advisor.

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