Pamela Kweller RSSA Staff
On Friday March 27, 2020 the President signed the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act, H.R. 748. The bill is approximately 900 pages in length and with that, there are many provisions. It is important to keep in mind that there are stipulations and requirements to qualify for certain benefits such as stimulus checks and small business loans. Here are just a few of the many significant changes made by the CARES Act.
Many Americans will receive a one-time payment to help alleviate financial struggle and to help stimulate the economy. Individuals will receive up to $1,200 and joint-filers will receive up to $2,400. An additional $500 will be provided for each child under 17 years of age. The amount received, if any, is dependent on several factors including but not limited to your 2018 (or 2019) tax return as well as your Adjusted Gross Income (AGI). The amount received will be reduced if your AGI is above $75,000 (or $150,000 for joint filers).
The usual 10% early withdrawal (from retirement accounts) fee will be waived for up to $100,000 for those who qualify for COVID-19 relief. Withdrawals will still be taxed, but over the course of three years.The 401(k) loan limit has been increased from $50,000 to $100,000 for 2020. Required Minimum Distributions (RMDs) from IRAs and 401(k)s are suspended temporarily.
The bill will provide $350 billion to small businesses to help prevent layoffs and closures. Some small businesses will be able to take out loans up to $10 million. There will also be a delay in the employer’s portion of Social Security payroll tax.
The bill will provide $450 billion to big corporations. Another $50 million will support airlines.
State and local governments:
The bill will provide $150 billion to help offset expenses used in response to the pandemic such as education and transportation.
The bill will dedicate $250 billion to the unemployment program, extending insurance, expanding eligibility (now includes freelancers), and increasing payments. It will provide an additional $600 each week for up to four months. It will also extend unemployment benefits for an extra 13 weeks.
The tax-filing deadline has been postponed to July 15, 2020 instead of the original April 15th deadline. Individuals will be able to deduct up to $300 of cash contributions to charity.
Close to $150 billion will support the health care system and hospitals during this crisis. Patients will no longer be charged to get tested for COVID-19.
There have been many changes and over the next few days, weeks, and months – we will better understand the implications of this bill. Along with the COVID-19 pandemic, these legislation updates could have a large impact on your current financial situation, your financial future, and your retirement plan. It is our advice and belief that it is in your best interest to work with a finance professional to guide you in the right direction and support you in making the best decisions.
You can read the CARES Act in its entirety here: