Liz Weston: Find free, solid money advice in uncertain times
If you have money questions — and who among us doesn’t right now? — there are plenty of people willing to offer advice: friends, relatives and random strangers on the internet.
Finding someone who knows what they’re talking about, and who isn’t trying to take advantage of you, can be tougher. Fortunately, several groups of credentialed, trustworthy financial advisers are stepping up to offer free help.
Groups such as the Financial Planning Association, the XY Planning Network, the National Association of Personal Financial Advisors, the Association for Financial Counseling & Planning Education and the National Foundation for Credit Counseling are among the organizations offering free consultations to help people navigate the pandemic’s economic fallout.
You can find links to the programs by either navigating to the organizations’ sites or searching for their names and the phrase “pro bono coronavirus.” (Pro bono means free.)
“There are so many different pieces of information and misinformation,” says Rebecca Wiggins, executive director of the AFCPE, which grants credentials to financial counselors and coaches. “If you’re not working with somebody who really understands the full picture, you could make really bad decisions.”
Wrong advice costly
A reader recently reached out to me after getting what they thought was a coronavirus hardship withdrawal from a former employer’s 401(k). Coronavirus hardship withdrawals, authorized by the Coronavirus Aid, Relief, and Economic Security Act, allow people to take up to $100,000 from their retirement plan balances without having to pay the usual 10% early withdrawal penalty. Income taxes are still owed on withdrawals, but the tax bill can be spread over three years. If you pay the money back, the taxes can be refunded.
What this reader actually got was a regular distribution — in other words, the 401(k) was cashed out. That triggers taxes and potential penalties without the option to spread out the tax bill or pay the money back.
A qualified financial adviser could have helped ensure that the plan offered the hardship withdrawal option (not all do), that the reader was eligible (people must be affected physically or financially by COVID-19) and that the paperwork was properly filled out.
What help you can expect
Consultations typically will be virtual, taking place over the phone or using videoconferencing software. All the financial advisers offering free services can help with topics such as budgeting, unemployment benefits, debt management and making the best use of CARES Act relief checks.
Certified financial planners with the FPA, the NAPFA and the XY Planning Network also can advise on more specialized topics, such as the Paycheck Protection Program and other help for small businesses. Credit counselors, meanwhile, work with creditors to arrange debt payoff plans and know about available forbearance programs.
Email: email@example.com. Twitter: @lizweston.