The CARES Act: How it Impacts You and Your Family

There has been a deluge of information, and misinformation, on the CARES Act and what it means to people. The Coronavirus Aide, Relief and Economy Security Act (CARES Act), is a $2 trillion aid package was passed by Congress and signed by Pres. Trump last month. There is a lot of confusion about who will get it, who is eligible, and how much a person will get. So, we wanted to provide some clarity on these points of concern:

  • The stimulus check:  You can receive up to $1, 200 per individual (or, if you have filed a joint tax return, $2,400 per married couple) plus $500 for every child aged 16 years or younger. Single adults who have an adjusted gross income of $75,000 or less will get the full amount. Married couples with no children earning $150,000 or less will receive a total of $2,400. And taxpayers filing as head of household will get the full payment if they earned $112,500 or less.
  • Mortgage forbearance: A mortgage forbearance is when your mortgage company or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. You will have to pay the payment reduction or the paused payments back later. For those that have a federally backed mortgage, you can ask your lender for a 6-month forbearance on making your payments.  During any forbearance period granted to you, your servicer cannot charge any penalties, interest, or fees that would not have been charged if you made your payments on time and in full. You can also ask later for a 2nd forbearance.  
  • Renter protection: The CARES Act also provides tenants with a 120-day moratorium of eviction proceedings if you are a tenant in a federally subsidized housing unit or a dwelling covered by a federally backed mortgage loan.  Landlords also can’t charge any fees or penalties related to nonpayment of rent.
  • Increased Unemployment Assistance: Provides an additional $600/week payment to each recipient of unemployment insurance for up to four months. Provides an additional 13 weeks of unemployment benefits through Dec. 31, 2020, for those who remain unemployed after state unemployment benefits are no longer available.
  • Delay in Tax-filing Requirements: Tax payers will now have until July 15, 2020, to file their 2019 tax returns instead of April 15.
  • Student Loans: Student loans are suspended for federally held student loans through Sept. 30, 2020, with no interest accruing or penalties during the period of suspension.
  • Retirement Accounts: If someone or their spouse or child have been diagnosed with COVID-19 or if you have had adverse financial implications due to the quarantine such as a job loss or a layoff the you can withdraw money from your 401K  or IRA without having to pay the 10% early withdrawal penalty for withdrawals up to $100,000. Income tax on the distribution would still be owed but can be paid over a 3-year period. The funds can be “recontributed” to the plan within three years with no contribution limits. Be sure to contact your plan administrator to determine whether their plan allows for COVID-19 distributions.
  • Increase in the Retirement Plan Loan Amount: Increases the amount that can be taken as a loan from a qualified retirement plan from $50,000 to $100,000 for 2020.
  • 2020 RMDs Waived for Retirement Accounts: With the exception of defined benefit plans, required minimum distribution (RMDs) are waived for all employer plans and IRAs in 2020, including inherited accounts. This provision also applies to RMDs due in 2020, but attributable to 2019. Individuals do not need to meet COVID-19 qualifying criteria to waive RMDs for 2020.

Also, remember to check with your local and state governments to see what gaps that they may fill in. They may be able to provide more relief to local citizens.  Additionally, please check with your insurance companies, credit card companies because they may be allowing delayed payments or waiving fees.