36 Policy Recommendations the Federal Government Must Enact Immediately

The recently passed CARES Act will provide financial relief to American families and businesses during the COVID-19 crisis, but many more laws and regulations must be changed immediately to further support families and the nation’s economy.

Indeed, the 320+ financial planners of Edelman Financial Engines, who collectively serve more than 90,000 clients nationwide, have crafted 36 policy recommendations that Congress and government agencies must implement now to provide relief to families nationwide.

Although some may question the long-term implications on the federal debt, such concerns must be deferred until the crisis is over. As firm founder Ric Edelman says, “When your house is on fire, you can’t focus on the water damage that firefighters might create by extinguishing the flames. Save the house and everyone in it – and deal with the water later.”

All of us at Edelman Financial Engines strongly encourage Congress, the President and the Administration to implement the following recommendations immediately.

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Crafted by the financial planners of Edelman Financial Engines, these policy actions are needed to support  the millions of Americans struggling financially in the COVID-19 Crisis

    COLLEGE

  1. Allow money in 529 College Savings Plans and Tuition Prepayment Plans to be withdrawn for purposes other than education, without taxes or IRS penalty, subject to income levels. Allow amounts withdrawn to be returned to the accounts without restriction. This will provide millions of families easier access to savings during the crisis.

    DEBT 

  2. Require mortgage lenders to provide forbearance and prohibit evictions through the crisis. Homeowners should not fear becoming homeless due to job loss caused by COVID-19.

  3. Allow deferral of payments for student loans, auto loans, business loans, credit cards and utility bills during the crisis, with no interest or penalties assessed against amounts not paid during this time. Prohibit seizure of collateralized assets during this time. During this crisis, when millions of Americans and small-business owners are struggling financially, emphasis should be placed on buying food and medicine – and little else.

  4. Broaden eligibility for homeowners to refinance their mortgages or obtain rate reductions on existing loans. Make it easier for millions of Americans to benefit from historically low interest rates; reducing their monthly mortgage payments will help them divert funds to food and medicine, and enable them to recover faster financially once the crisis is over.

  5. Allow consumers to obtain free credit reports and scores more frequently during the crisis. Given the dynamic nature of the crisis, and the prevalence of scam artists, let individuals verify their credit status as often as they want.

  6. Do not allow credit scores to be lowered as a result of COVID-related unemployment during the crisis and for a period of time following the crisis. Americans should not be financially punished for losing their jobs due to COVID-19.

    FLEXIBLE SPENDING ACCOUNTS 

  7. Let those who made annual elections to FSAs for dependent care stop their contributions. Since child care centers are closed, people should be released from their obligation to pay into FSAs. Instead, let people resume their contributions when the facilities re-open.

  8. Do not require that FSA assets be used within one year. Instead, let people spend the money only when needed.

    HEALTH SAVINGS ACCOUNTS

  9. Allow HSA assets to be used for any purpose. Currently money in HSAs must be used for limited purposes.

    INVESTING  

  10. Have the U.S. Treasury sell “Corona Bonds” similar to the War Bonds that were sold during World War II. This will help the federal government raise the money it needs to provide support and benefits to American families and businesses.

  11. Allow unlimited tax-deductibility of capital losses to offset capital gains and other income, subject to income limits. This will prevent investors who bought investments in good faith prior to the crisis from being unduly penalized for doing so. It will also motivate investors to unlock assets for redeployment in the economy, helping our nation recover faster financially from COVID-19’s economic impact.

    IRAs and RETIREMENT ACCOUNTS

  12. Allow parents and grandparents to give up to $100,000 from their IRAs and workplace retirement accounts to their children and grandchildren with no tax or IRS penalty. Millions of Americans have assets locked away in retirement accounts, inaccessible due to large tax liabilities. Many of these have children and grandchildren who need financial support during these challenging times – so let’s make it easier for family members to help each other, without interference from the IRS.

  13. Allow loans from IRAs and workplace retirement accounts up to $100,000 or account value, during the crisis, with the ability to return borrowed funds to the accounts after the crisis with no interest or penalty. By granting access to their own money more freely, we reduce the need for the federal government to send checks to American households – enabling the nation to recover faster from this crisis.

    - Allow the repayments to be made with pre-tax dollars. It is patently unfair to make workers repay pre-tax loans with after-tax dollars, as doing so forces Americans to literally pay taxes twice.

  14. Eliminate the mandatory 20 percent tax withholding on all withdrawals from IRAs and workplace retirement accounts. When someone makes a withdrawal, let them receive 100 percent of it, not just 80 percent.

  15. If an employee separates from service with a loan outstanding against their retirement account, allow repayment to be deferred until after the crisis is over, and then allow a repayment schedule for 10 years rather than the five years that current rules require. When someone loses their job, it is a non sequitur to demand that they give a portion of their limited assets back to their former employer’s retirement plan. Let that repayment occur later – after the crisis is over.

  16. Allow fired, laid-off and furloughed workers under age 55 to withdraw funds from their IRAs and workplace retirement accounts without IRS penalty. Similarly, displaced workers need more, not less, access to their own money.

  17. Allow people to withdraw money tax- and penalty-free from their Roth IRAs and workplace retirement accounts without having to wait for the accounts to be in place for 5 years. During this crisis, people don’t have 5 years to wait. Give them access now, without IRS interference.

  18. Allow withdrawals from IRAs and workplace retirement accounts penalty-free regardless of age, and defer taxes distributions until the crisis is over. Currently, only those 59½ are permitted to make withdrawals without penalty.

  19. Allow recharacterization of Roth IRAs back to Deductible IRAs. The crisis has harmed people who made conversions in good faith pre-crisis. Do not punish them financially for something no one could have anticipated.

    PENSIONS

  20. Encourage corporations to increase flexibility in their defined benefit plans, allowing people with pensions to begin receiving income at age 60. Most pensions require retirees to be age 65 or older. By allowing people within 5 years of retirement the ability to start receiving their pensions, albeit at reduced amounts, the need for the federal government to provide checks to some people will be reduced. This will allow the government to more ably help others in greater need.

    SOCIAL SECURITY, MEDICARE and HEALTH INSURANCE

  21. Suspend FICA payments for the duration of the crisis, and allow payback over a three-year period. The CARES Act does this for small business owners. It should be done for employees as well.

  22. Eliminate income limitations for those receiving Social Security benefits from age 62 to their Full Retirement Age. By allowing more people to access their Social Security retirement benefits without adverse IRS consequences, more people will sign up – easing both their current financial burden and that of the federal government, which is trying to provide financial support to all Americans in need.

  23. Allow those 62 and older who have not started receiving their Social Security benefits to do so, and then to stop when the crisis is over. This way, retirees won’t lock themselves into lower benefits for the rest of their lives.

  24. Eliminate Medicare’s Part B Premium for the remainder of the crisis. This will reduce the health care costs of millions of Americans.

  25. Offer Medicare to those over 50 who lost insurance due to unemployment and can’t afford COBRA. This too will reduce the health care costs of millions of Americans.

  26. Allow those who 30 and younger to return to their parents’ health insurance policies for the remainder of the crisis. Currently, people over 26 are no longer eligible for coverage by their parent’s policies. Millions of adults in their 20s who lose their jobs due to COVID-19 also lose their employer-provided health insurance.

    TAX 

  27. Eliminate the Income-Related Monthly Adjustment Amount that some people must pay in addition to their Medicare Part B and Part D premiums, subject to income limits. This will increase the spendable income for many American households.

  28. Allow financial planning and investment management advisory services to be tax-deductible. By allowing all Americans to obtain expert financial advice on a pre-tax basis, millions will be able to access advice that can materially improve their ability to financially survive and recover from the crisis.

  29. Defer payment of personal income taxes until after the crisis is over, and then allow taxpayers to make payments over 10 years. People need to spend their money on food and medicine during this crisis. Let them do that instead of sending limited funds to the IRS.

  30. Provide a 100% tax credit for all charitable donations. Non-profit organizations are struggling to serve their constituents during this crisis. This incentivizes Americans to be generous during this great time of need.

  31. Allow alimony payments to be tax-free. This incentivizes exes to provide agreed-to funding to their exes.

    FIRST RESPONDERS and HEALTHCARE PERSONNEL


  32. Provide tax-free Hazard Pay to first responders and healthcare personnel. Military personnel receive hazard pay when in war zones – and unlike them, first responders and healthcare personnel never expected to be a personal risk by simply doing their job.

  33. Allow overtime for first responders and healthcare personnel to be tax-free. Allow all income for nurses to be tax-exempt for duration of the crisis. First responders and healthcare personnel should be rewarded for their heroic work they are performing during this crisis.

  34. There is a critical shortage of healthcare workers nationwide. To help solve this acute problem:

    - Grant medical licenses immediately to the more than 90,000 medical school students who are within 2 years of graduation so they can begin working in hospitals right now.

    - Grant nursing licenses immediately to the more than 240,000 nursing school students who are within 18 months of graduation so they can begin working in hospitals right now.