The House of Representatives has passed the CARES Act (Coronavirus Aid, Relief, and Economic Security).  This is a $2 trillion emergency relief bill.  The intent, quickly put money into the hands of those who may be most impacted by the current health and financial struggles Americans are now facing. 

What You Need To Know

You may be provided some financial relief.  Individuals with an Adjusted Gross Income (AGI) of less than $75,000 will receive a one time check for $1200.  Married couples with AGI less than $150,000 will receive $2400.  Taxpayers will receive another $500 for each qualified child.  If an individual or married couple’s AGI exceed these thresholds, the result is a $50 reduction of benefits for every $1000 over caps.   

Retirement Accounts

The CARES Act will temporarily eliminate the 10% early withdrawal penalty from retirement accounts for Covid-19 related distributions.  Additionally, Required Minimum Distributions (RMD) will be suspended in 2020 for many retirement accounts (Kitces 2020).

Employer Relief

Small businesses have been dramatically affected by the Coronavirus Pandemic.  The CARES Act seeks to provide employers with some much needed support.  Certain small business will be able to take out loans, “eligible for forgiveness if used to cover payroll and other expenses (like rent and utilities), along with other ‘employee retention’ tax credit opportunities”  (Kitces 2020). 

Conclusion

Americans are facing unprecedented challenges regarding both health and finance.  The shelter in place orders have had a dramatic effect on finances, but the CARES Act was passed today and is expected to provide financial help immediately. 

References

Michael Kitces at Nerd’s Eye View:  Kitces, Michael. “Advancing Knowledge in Financial Planning.” Nerd’s Eye View | Kitces.com, 27 Mar. 2020, www.kitces.com/.  https://www.kitces.com/blog/analyzing-the-cares-act-from-rebate-checks-to-small-business-relief-for-the-coronavirus-pandemic/

DISCLAIMER

The opinions expressed in this newsletter (article) are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to accuracy or completeness. 

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