CARES Act: 5 Provisions You Should Know
Coronavirus Aid, Relief and Economic Security (CARES) Act
On Friday, March 27th, the U.S. House of Representatives passed, and the President signed into law, the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Act is designed to boost the economy by providing over $2 trillion in relief. Here are some highlights:
Required Minimum Distributions are waived in 2020 for all retirement accounts, including inherited IRAs. 2020 is ignored for the purposes of the 5-year rule that applies to Non-designated beneficiaries (charities, estates, non-see-through trusts) who inherit a retirement account from decedents who die prior to reaching their required beginning date.
Coronavirus-related distributions are distributions of up to $100,000, made from IRAs, employer-sponsored retirement plans, or a combination of both, which are made in 2020 by an individual who has been impacted by the coronavirus. Distributions are exempt from the 10% penalty, and not subject to mandatory tax withholding requirements. Taxes are required to be paid but can be spread over a 3-year period.
For many families, the CARES Act will free up short-term funds that should become available within a matter of weeks. This translates to a $1,200 check for those who earn less than $75,000. Married couples who file jointly will receive $2,400 if their earnings don’t exceed $150,000. Parents can also expect an extra $500 for each dependent child. The income threshold will be determined based on your 2019 tax return, or 2018 if that’s the most recent return filed.
People who have federal student loans can now defer their payments through September 30, 2020. Interest will not accrue on the debt during this time, and involuntary collection of student loans will be stopped as well.
Small Business Benefits
Businesses, non-profits, and self-employed folks with 500 or fewer workers can apply for small business loans up to a maximum of the lesser of $10 million.