Foremost, we hope that this message finds you well as we work to overcome the Coronavirus and its impact on the economy. We give thanks to those on the frontline, including health care and public safety workers, police and law enforcement members, and the many others in the industries providing essential services. Amidst the eerie calm of our motionless society, Congress is working to support individuals and businesses unable to operate in the midst of the Covid-19 Pandemic. Initiatives that began on March 6th, with the signing of the “Phase One” $8.3 billion spending bill, up to the most recent aid package announced by the Federal Reserve on April 9th are offering trillions of dollars in aid.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, is intended to have the greatest impact. Launched to mitigate the economic devastation of a nationwide quarantine this is the largest stimulus bill ever created in the history of the U.S.
The outline and chart following summarize the various provisions of the CARES Act helping individuals and businesses, including Federal Student Loan Relief, Home Loan Relief and Renter Relief programs. Here are some of the more notable characteristics of this recent legislation:
- Within a certain income range, may receive a $1,200 payment for individuals or $2,400 for couples, plus as applicable a one-time payment of $500 per qualifying child.
- An expansion of unemployment benefits with an extra $600/ week for up to six months. Unemployed workers will also receive an additional 13 weeks of benefits.
- The IRS has changed the federal tax filing deadline from April 15 to July 15. The deadline for making a 2019 IRA or SEP-IRA contribution has also been extended to July 15.
Federal Student Loan Relief:
- Federal student loan payments are suspended from March 13 to September 30, 2020. Payments will automatically stop during this period.
Home Loan Relief: Federally Backed-Mortgages:
- Homeowners with federally-backed mortgages are able to get assistance as follows:
- For those eligible, a mortgage forbearance plan to reduce or suspend mortgage payments for up to 12 months is available.
- There are no late fees or other penalties while in forbearance however the terms of the mortgage will continue requiring arrangements to be made to make up for missed payments.
- At the end of the forbearance period, mortgage servicers will work with homeowners to determine which assistance program (repayment plan, loan modification, or an extension of the forbearance period) works best for the homeowner.
Renter Relief: Multi-Family Homes with Federally- Backed Mortgages:
- Renters may be covered by a 120-day eviction moratorium for not paying rent. The moratorium started March 27th. Late fees or penalties won’t be assessed for not paying rent during this time.
Help for those with retirement accounts:
- RMD’s waived for 2020 intended to help those whose retirement accounts have suffered losses due to the recent market losses. It may add an element of confusion since through the newly enacted SECURE Act, the RMD age recently changed from age 70 ½ to age 72.
- Special hardship withdrawals from retirement accounts. A “qualified individual” can take a withdrawal of up to the lesser of $100,000 or their vested account balance from their defined contribution plan or IRA. The 10% early withdrawal penalty applied to those under the age of 59 ½ is waived but income taxes on taxable distributions are still required but may be paid in three equal installments for the 2020 – 2022 tax years.
- Special hardship withdrawals and retirement plan loans are doubled to $100,000 (or up to 100% of vested account balance for those with less than $100,000 of vested account balances) if taken over the next 180 days.
- Minimum funding deadlines for Defined Benefit and Cash Balance Plans that are due in 2020 have been extended until January 1, 2021.
Businesses: (Programs designed to help keep small businesses afloat)
The Paycheck Protection Program is intended for businesses with less than 500 employees, private non-profit organizations and veterans’ organizations. Highlights may include:
- Loans for payroll and certain other expenses. For businesses that retain and pay all employees for eight weeks, loans used for payroll, rent, mortgage interest and utilities will not have to be repaid.
The Economic Injury Disaster Advance Loan provides a loan advance for businesses losing money due to the Coronavirus and provides for advances up to $10,000 with the money being available within three days of a successful application.
Businesses of all sizes that are impacted directly by the Coronavirus pandemic are able to receive a tax credit for keeping employees on their payroll under the Employee Retention Credit. For each employee, wages (including certain health plan costs) up to $10,000 may be credited up to 50%.
Legislation to offset the economic impact of the Coronavirus has been created and released from Congress on a fast and furious basis. The rules are incomplete, and the benefits and conditions are voluminous. We will endeavor to keep pace accordingly and provide information to you all on a timely and regular basis. In the meantime, lets hope that the root of the shock to the global economic system and a cause for worry, pain, suffering and death for so many is quickly eliminated with treatment and an eventual cure to this terrible illness. Please stay safe and know that my team and I are committed to working through the other end of this and continuing our focus on assisting you in reaching your financial goals.