Broker Check

The CARES Act

April 07, 2020
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Hopefully, by now most of you have heard of the recent relief package passed in Congress and signed into law by the President. The bill, known as The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) will provide substantial economic assistance to both individuals and businesses. It is likely to be followed by additional fiscal and monetary stimulus and the programs included in the bill are far reaching (it’s 335 pages, you can find it here[1]), so we’ll do our best to limit this communication to the major components of the bill likely to impact the largest number of our clients. If you are a business owner and want additional information on the Paycheck Protection Program or the other grant and loan provisions in the bill, best to reach out to your individual advisor to discuss further.

Major changes likely to impact many of our clients:

  • No required minimum distributions (RMDs) in 2020. For those of you who are taking distributions for income, no need to make changes. For those of you who have already taken your RMD and may not need or want it, we can discuss if making adjustments is an option, but be aware that if it was taken more than 60 days in the past, there’s nothing we can (currently) do to reverse it. This applies to both regular and beneficiary IRAs.
  • Cash Payments: These are based off family size and adjusted gross income from either 2018 or 2019 (2018 if you haven’t yet filed your 2019 return). Each qualifying individual/family will get $1200 per adult and $500 per child. For purposes of qualification, if you’re a single filer, you’ll get the full amount if your income didn’t exceed $75,000 and you’ll get gradually less until reaching $99,000, at which point you would not receive a cash payment. For couples filing jointly, those numbers double (full payment at $150,000 AGI and completely phased out by $198,000). If you’re not sure where to find your AGI, it depends on what type of 1040 you file – it should be line 8b or line 35 depending on return type. For those of you on Social Security that don’t file returns – you will not be required to do so to receive the payment, Social Security will provide the necessary information.
  • Tax filing deadline: The filing deadline has been extended to July 15, 2020 (for 2019 returns) and with that, the extension of the retirement plan contribution deadline. Oddly enough, if you’re paying quarterly estimates, your second quarter will now technically be due before your first quarter (June 15 and July 15). This is because the first quarter payment typically coincides with the tax filing deadline, while the second quarter comes due in June.

Please realize that this is an extremely abbreviated list and if you’ve been impacted as either an employee or a business, there is likely one or multiple provisions in the bill designed to help you (from extended unemployment and insurance benefits, to loans, grants, and loan relief). If you’re not sure how to get this information, please reach out to us and we’ll happily point you in the right direction. If you want to read a more detailed version, the Congressional website referenced earlier has the entire bill, NPR has a nice summary[2], and for a more in-depth version, Jeffrey Levine[3] does a nice job, as well. Remember, we’re here to help. Although our work arrangements are a little different at the moment, we don’t have any practical limitations as far as availability is concerned.

[1]https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf

[2]https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package

[3]https://www.kitces.com/blog/analyzing-the-cares-act-from-rebate-checks-to-small-business-relief-for-the-coronavirus-pandemic/