On March 27th, Congress approved the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This historical $2 trillion relief package provides much needed financial support to businesses and individuals whose lives have been disrupted by the pandemic. Although the stimulus is far from perfect, there are many provisions in the bill that can directly help you advise your clients, especially if they are experiencing recent unemployment, cash flow disruptions, or restrictions on their ability to profitably operate a business. From cash payments, distributions, and unemployment benefits, here’s a breakdown of some of the most important provisions found in the CARES Act.

Direct Cash Payments

Perhaps the most publicized provision in the relief package is the direct, one-time cash payment to millions of Americans. Sometime within the next few weeks, the IRS will send checks, or direct deposits, of up to $1200 to every American adult. In order to qualify for this payment, you must have filed taxes either for 2018 or 2019, made below $99,000 (individuals) or $198,000 (couples), and have no outstanding child support bills. Households with children or qualified dependents can also receive $500 per child. Please note, only individuals making $75,000 or less will receive the full $1200, anyone making between $75,000 and $99,000 will receive a smaller payment on a sliding scale.

Federal Unemployment Assistance

The federal government is contributing billions of dollars to state unemployment insurance pools. Any person who qualifies for unemployment benefits can receive up to $600 per week from the federal government. When you combine that with state benefits, individuals can expect somewhere between $800 and $900 per week in benefits. Unemployment terms and benefits vary from state to state, so be sure to consult the appropriate state office if you have clients who reside outside of New York State.

Penalty-Free Distributions and RMD Waivers

If you qualify as an individual impacted by COVID-19, you can receive an exemption from early distribution penalties prior to age 59.5. You can receive penalty-free distributions of up to $100,000 from employer retirement plans and IRAs for all of 2020. In addition, RMDs are suspended for 2020 across the board. We don’t want to advertise or encourage these provisions. However, if you have clients who are facing genuine hardship, these may be an immediate option for relief.

Small Business Loans & Paycheck Protection Program

The Paycheck Protection Program offers immediate relief to business impacted by the coronavirus. These loans are designed to keep their workers on payroll throughout the crisis. The Small Business Administration, which is administering the loans, will forgive any loans if all employees are kept on payroll for eight weeks and the money is used for expenses such as rent, utility payments, mortgage interest, or payroll. Businesses can apply through any existing SBA (7) lender or federally insured bank, credit union, or farm credit system. Processing began on April 3, 2020 and loans are available through June 30, 2020.

CARE Act Paycheck Protection Program Details >

Paycheck Protection Program Application Form >