Legislation recently passed to deal with the COVID-19 crisis: “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act”
CARES Act - Provides Benefits to Individuals and Families:
- Cash payments to individuals ($1200) or married couples ($2400) by direct deposit or check within next few weeks
- Income limits of $75,000/$150,000 graduated up to $99,000/$198,000 to receive cash payment
- Social Security recipients will receive cash payments as well (the same way they receive their Social Security payment)
- Sec. 2201. 2020 Recovery Rebates For Individuals
CARES Act - Specifically Addresses Required Minimum Distributions (RMDs):
- RMDs no longer required for 2020 (those previously taking RMD aged 70 ½ or turning 72 this year)
- Any RMDs already taken can be restored (includes taxes and not bound to normal 60-day rule for restoring funds)
- Any RMDs scheduled for the rest of 2020 can be stopped
- Applies to beneficiary RMDs and anyone who delayed 2019 RMD until April 2020 as well
- If you still want to receive your RMDs - No action needs to be taken
- Sec. 2203. Temporary Waiver of Required Minimum Distribution Rules For Certain Retirement Plans And Accounts
CARES Act - Allows Hardship Withdrawals from Retirement Accounts with No Early Withdrawal Penalty:
- Waiver of 10% penalty if withdrawn prior to age 59 ½
- For COVID-19 Related Hardship withdrawals Not to Exceed $100,000/year (for 3 years)
- Tax Liability can be stretched over a period of 3 Tax years starting with the Calendar Year distribution is taken
- Funds can be Repaid into Retirement Account Any Time During 3 year period Beginning the day after Distribution was received
- Please consult your CPA or Tax Professional to discuss your specific tax situation
- Sec. 2202. Special Rules For Use Of Retirement Funds
CARES Act - Expands Unemployment Criteria and Benefits:
- More people will qualify
- Increased state benefits
- $600 more/week than the previous maximum
- Sec. 2102. Pandemic Unemployment Assistance
CARES Act - Provides Relief to College Graduates:
- No payments through September 2020 for federally subsidized student loans
- No accrued interest on these same loans
- Please Contact Your Student Loan Provider to Discuss Your Situation
- Sec.3513. Temporary Relief For Federal Student Loan Borrowers
CARES Act - Provides Small Business Benefits and Programs:
- Economic Injury Disaster Loan (EIDL)
- Payroll Protection Program Loan (PPPL)
- Express Bridge Loan (EBL)
- Closed Business Relief (CBR)
- Contact your bank or visit theSBA’s websitefor more details
- Division A - Keeping Workers Paid And Employed, Health Care System Enhancements, And Economic Stabilization Title I - Keeping American Workers Paid And Employed Act
To read the full text of the Bill, please click the link below.
https://www.congress.gov/bill/116th-congress/house-bill/748/text
The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. This is meant to be general, and it is not investment or financial advice or a specific recommendation of any kind. Opinions and forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those anticipated. Please consult your financial advisor before making financial decisions. Waddell & Reed does not offer tax or legal advice. (04/03/20)