The novel coronavirus (COVID-19) pandemic has forced many of us to work differently — whether it’s isolated at home or in-person wearing facial masks and other protective gear. Even if your not-for-profit’s board of directors usually meets in person, current events strongly suggest the need for a Plan B. Here are some best practices for holding virtual board meetings.

Anticipate hurdles

With many board members under continued stay-at-home or quarantine orders, virtual meetings can enable more people to attend and your board to achieve a quorum. But before you set up a Zoom, WebEx or other online video meeting, check your state’s laws. Some states, for example, allow nonprofit boards to hold teleconferences but not videoconferences. Your organization’s bylaws might also prohibit virtual meetings.

Even if your state’s laws and nonprofits’ bylaws give you the go-ahead, consider potential communication issues. For example, in teleconferences, participants won’t be able to read each other’s facial expressions and body language. Even in videoconferences, board members may be unable to observe these cues as easily as they could in person — potentially leading to misunderstandings or conflicts.

In addition, the chair might find it difficult to shepherd discussion, especially if your board is bigger. Confidentiality is a concern, too. You must be able to trust that participants are alone and that their family members aren’t listening in to the conversation.

Get member buy-in

Don’t spring a virtual meeting on board members without first discussing with them the implications of such a change. Some board members may prefer to wait until stay-at-home orders are lifted and delay a meeting rather than conduct one remotely.

You’ll also need to ensure that all participants have the equipment they need. Test the system you’ve decided to use ahead of time and establish backup plans in the event of technological failures. Also, plan to send board members any supporting materials well in advance of your meeting and make them available online during the event.

Recognize that voting on any issue will need to be verbal and not anonymous, with each board member identifying himself or herself. Also, straightforward issues — such as updates from development staff or the formal approval of a policy — are better suited to virtual discussion than potentially controversial ones. Of course, given current circumstances, your board may have no choice but to consider emergency measures via tele- or videoconference.

Lean on your board

Board members have likely already been in touch as your nonprofit confronts pandemic-related challenges. However you decide to hold board meetings, make sure you’re in constant touch with your directors and soliciting their advice when any difficult decisions need to be made.

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Many people’s estates typically include IRAs. Be aware that two major laws passed into law recently, the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, have had a direct effect on IRAs.

In a nutshell, the CARES Act waives required minimum distribution (RMD) rules for IRAs (and certain defined contribution plans) for calendar year 2020. If you’re fortunate enough that you don’t need to make withdraws from your IRA, there’s an opportunity to leave more for your heirs in your retirement plan. However, bear in mind that because the SECURE Act generally put an end to “stretch” IRAs, the estate planning benefits of inheriting IRAs are somewhat muted.

RMD rules waived

Not taking RMDs in 2020 is particularly advantageous because the amount of the distribution is based on year-end 2019 account values. Otherwise, you might be forced to liquidate account assets at depressed values during the stock market downturn.

The waiver covers both 2019 RMDs required to be taken by April 1, 2020, and RMDs required for 2020. It applies for calendar years beginning after December 31, 2019.

“Stretch” IRAs eliminated

Perhaps more important for some estate plans, the SECURE Act eliminates so-called “stretch” RMD provisions that have allowed the beneficiaries of inherited IRAs and defined contribution accounts to spread the distributions over their life expectancies. Younger beneficiaries could use the provision to take smaller distributions and defer taxes while their accounts grew.

Under the SECURE Act, most beneficiaries must withdraw the entire balance of an account within 10 years of the owner’s death. However, they don’t have to follow any set schedule. They can wait and withdraw the entire amount at the end of 10 years if they wish.

The new rules apply only to those inheriting from someone who died after 2019. Thus, if you inherited an IRA years ago, you won’t be subject to the new rules with respect to your RMDs. However, when your beneficiaries inherit the IRA from you, they’ll be subject to the new rules.

Review your plans

The changes made by the CARES Act and the SECURE Act may have an impact on your retirement and estate plans. We can help you review your plans to ensure that they continue to meet your objectives.

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A natural place to turn when disaster strikes is insurance. The very reason you pay premiums and deal with the paperwork is to have these risk management policies in place when necessary. But, when it comes to business interruption coverage, you may have to adjust your expectations if you intend to file a claim because of the novel coronavirus (COVID-19) pandemic.

Differing views

Business interruption insurance generally provides cash flow to cover revenues lost and expenses incurred while normal operations are suspended because of an applicable event. So, many business owners are now asking an unavoidable question: Is the COVID-19 pandemic an applicable event?

Many insurers are saying no, claiming the “force majeure” legal defense. This refers to situations in which unexpected external circumstances prevent a party to a contract — in this case, the insurance company — from meeting its obligations.

Insurers are also citing policy language that stipulates coverage applies only when a policyholder suffers a loss of income as a result of physical loss or damage to covered property. COVID-19 doesn’t qualify as a physical loss, they argue. In addition, insurers contend their policies don’t cover loss of income because of market conditions or an economic slowdown.

Lawsuits have already been filed challenging the insurance companies. Attorneys, representing business owners, are arguing that the recent rise of SARS, MERS and the Avian flu have given insurance companies ample opportunity to anticipate a global pandemic.

Attorneys have additionally pointed out that the virus can attach itself to physical surfaces. Thus, they contend, it does result in a physical loss as businesses are losing revenue and incurring expenses for disinfection and prevention.

Preparatory steps

As these lawsuits play out, you may wonder whether it’s worth your time to file a business interruption claim related to the pandemic. The answer depends on your policy’s language, as well as the facts and circumstances of your company’s situation.

To decide whether and how to proceed, review your policy carefully. Look at the type of losses covered, as well as exclusions and limitations. You may want to consult an attorney, as insurance policy language and structure can be confusing.

If you decide to move ahead with a claim, you’ll need to document the adverse financial impact of the pandemic, including:

• Loss of income, as defined under your policy,
• Customer attrition rates, and
• Incremental expenses incurred, such as site security or cleaning services.

Many policies require policyholders to notify the insurer of a loss within a certain period, so you may need to move quickly.

No easier

Even before the COVID-19 crisis, receiving a payout for a business interruption claim was typically not a cut-and-dried affair. Suffice to say, doing so hasn’t gotten any easier. We can help you assess and document financial losses and expenses before deciding whether to file a claim.

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The novel coronavirus (COVID-19) pandemic has refocused people’s thoughts on the health and safety of their families. In addition to taking the necessary steps today to protect your loved ones, it’s equally important to consider their financial security in the future.

If you don’t have a will, drafting one should be your first step in developing a comprehensive estate plan. Because of stay-at-home orders in many states, it may be tempting to turn to online do-it-yourself (DIY) tools that promise to help you create a will (and other estate planning documents). Even though this may be a relatively cheap option, using these online tools is risky except in the simplest cases.

A will that isn’t executed properly under state law isn’t legally binding. Therefore, your assets may be divided according to state intestacy laws, regardless of your intentions. And, if you have young children, a court may appoint their legal guardian.

No “one-size-fits-all” solution

Despite what you might have read online, there’s no single prototype for wills. It’s complicated because the laws can vary widely from state to state. For instance, some states recognize oral wills, while others don’t. Or a state may require two or even three attesting witnesses.

One common mistake of DIY wills is leaving out important provisions that can lead to challenges in the future. Case in point: If the will doesn’t include a residuary clause addressing amounts that are “left over” after estate debts and tax payments have been settled, an unspecified party could walk away with a large sum of money. It might even be a family member you had wanted to “disinherit.”

Turn to a professional

The bottom line is that there is too much risk by taking shortcuts when it comes to drafting your will. Have your will drafted and executed by a reputable attorney. Questions? Contact us.

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Do you want to save more for retirement on a tax-favored basis? If so, and if you qualify, you can make a deductible traditional IRA contribution for the 2019 tax year between now and the extended tax filing deadline and claim the write-off on your 2019 return. Or you can contribute to a Roth IRA and avoid paying taxes on future withdrawals.

You can potentially make a contribution of up to $6,000 (or $7,000 if you were age 50 or older as of December 31, 2019). If you’re married, your spouse can potentially do the same, thereby doubling your tax benefits.

The deadline for 2019 traditional and Roth contributions for most taxpayers would have been April 15, 2020. However, because of the novel coronavirus (COVID-19) pandemic, the IRS extended the deadline to file 2019 tax returns and make 2019 IRA contributions until July 15, 2020.

Of course, there are some ground rules. You must have enough 2019 earned income (from jobs, self-employment, etc.) to equal or exceed your IRA contributions for the tax year. If you’re married, either spouse can provide the necessary earned income.

Also, deductible IRA contributions are reduced or eliminated if last year’s modified adjusted gross income (MAGI) is too high.

Two contribution types

If you haven’t already maxed out your 2019 IRA contribution limit, consider making one of these three types of contributions by the deadline:

1. Deductible traditional. With traditional IRAs, account growth is tax-deferred and distributions are subject to income tax. If you and your spouse don’t participate in an employer-sponsored plan such as a 401(k), the contribution is fully deductible on your 2019 tax return. If you or your spouse do participate in an employer-sponsored plan, your deduction is subject to the following MAGI phaseout:

• For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
  • For a spouse who participated in 2019: $103,000–$123,000.
  • For a spouse who didn’t participate in 2019: $193,000-$203,000.
• For single and head-of-household taxpayers participating in an employer-sponsored plan: $64,000–$74,000.

Taxpayers with MAGIs within the applicable range can deduct a partial contribution. But those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

2. Roth. Roth IRA contributions aren’t deductible, but qualified distributions — including growth — are tax-free, if you satisfy certain requirements.

Your ability to contribute, however, is subject to a MAGI-based phaseout:

• For married taxpayers filing jointly: $193,000–$203,000.
• For single and head-of-household taxpayers: $122,000–$137,000.

You can make a partial contribution if your 2019 MAGI is within the applicable range, but no contribution if it exceeds the top of the range.

3. Nondeductible traditional. If your income is too high for you to fully benefit from a deductible traditional or a Roth contribution, you may benefit from a nondeductible contribution to a traditional IRA. The account can still grow tax-deferred, and when you take qualified distributions, you’ll only be taxed on the growth.

Act soon

Because of the extended deadline, you still have time to make traditional and Roth IRA contributions for 2019 (and you can also contribute for 2020). This is a powerful way to save for retirement on a tax-advantaged basis. Contact us to learn more.

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