Resource Center

Resource Center

Our first priority is helping you take care of yourself and your family. We will update this page regularly to provide you with one place to access information about the COVID 19 Pandemic as we move through the 2020 year. 

Key Provisions of the CARES Act

On March 27th the $2 trillion “Coronavirus Aid, Relief, and Economic Security” (“CARES”) Act was signed into law. The CARES Act is designed to help those most impacted by the COVID-19 pandemic, while also providing key provisions to help individuals and businesses. There are three provisions which relate to retirement accounts of those affected by coronavirus:

1. Required Minimum Distributions (RMDs) for 2020 are not required. The CARES Act suspends the minimum required distributions most people must take from certain defined contribution plans and IRAs in 2020 to help retirement accounts try to recover from stock market losses.
2. Distributions prior to age 59 ½ of up to $100,000 are not subject to penalty in 2020. Account owners affected by coronavirus can take a distribution of up to $100,000 from their retirement plan or IRA in 2020 without the 10-percent early withdrawal penalty that normally applies to money taken out before age 59 ½.
3. Distributions of up to $100,000 this year can be reported as income over three years. The income tax on the distributions can be spread evenly over three years. Alternatively, the distribution may be repaid to an eligible retirement plan within a three-year period.

The suspension of the RMD rules apply to all taxpayers who are otherwise required to receive an RMD in 2020. The other provisions apply only to IRA owners affected by coronavirus as defined as a person:
1. Who is diagnosed with COVID-19 or SARS-COV-2; or
2. Whose spouse or dependent is diagnosed with COVID-19 or SARS-COV-2; or
3. Who is experiencing adverse financial consequences as a result of an event, including but not limited to quarantine, furlough, lay-offs, reduced work hours, no available childcare, business closing or reduced business hours (self-employed), or other factors determined by the Secretary of the Treasury.

Additionally, the IRS has moved the deadline for filing and the payment of 2019 federal income taxes from April 15 to July 15, 2020. The IRS confirmed that July 15, 2020, will also be the deadline to make 2019 contributions to IRAs and health savings accounts (HSAs). Deadlines associated with contributions to workplace savings plans are not affected.

The CARES Act includes a provision to send most Americans direct payments of $1,200 for single filers, or $2,400 for joint filers, plus $500 for each child. These payments are based on the 2019 tax returns for those who have filed them and 2018 information if they have not. The amount is reduced if an individual makes more than $75,000 or a couple makes more than $150,000. Those who make more than $99,000 as an individual (or $198,000 as a couple) will not receive a payment.

Many businesses and individuals are struggling with the realities that COVID-19 has brought to our communities. The CARES Act, however, may provide some much-needed relief.

Please contact us today with questions about how the CARES Act may affect you.

This information has been derived from sources deemed to be reliable but cannot be guaranteed. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. You should always consult your own legal or tax professional for information concerning your individual situation.


Sources
https://www.cnbc.com/2020/03/30/op-ed-heres-how-to-take-money-from-retirement-account-under-stimulus-bill.html
https://www.irs.gov/coronavirus
https://www.washingtonpost.com/business/2020/03/30/coronavirus-stimulus-cares-act/

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