​​The CARES Act

Coronavirus financial relief for individuals

On March 27, 2020, the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. Following is a summary of the Act’s provisions designed to provide relief to individual Americans.

Direct cash payments

Federal government cash payments of $1,200 will be made to each individual adult and $500 for each child age 16 or younger. Single adults with Social Security numbers 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 head of household filers will get the full payment if they earned $112,500 or less.¹ Above these amounts, payment decreases until it stops for single people earning $99,000 or married people who have no children and earn $198,000. No payment will be made to an adult who someone has claimed as a dependent. Payments are expected to begin in mid to late April and will start with direct deposits to taxpayers who have provided their bank information to the IRS.

Expanded unemployment insurance for uncovered workers

Temporary Federal unemployment insurance is available to individuals who would not otherwise be eligible for state unemployment insurance such as the self-employed, independent contractors, gig workers, part-time employment seekers, those who lack sufficient work history, or those who have exhausted their unemployment benefits under existing programs.

Federal student loan relief

Through September 30, 2020, there is a suspension of federal student loan payments, federal student loan interest, and loan debt collection from those in default. This provision applies only to non-defaulted Direct Loans and FFEL loans currently owned by the Department of Education.

Retirement plans and income tax deadline

• The income tax filing deadline, and the deadline for 2019 IRA and HSA contributions, are extended from April 15, 2020 to July 15, 2020.
• There are no required minimum distributions (RMDs) from 401(k), 403(b), 457(b) and other employer-sponsored plans in 2020.²
• Pre-59 1⁄2 penalty-free withdrawals of up to $100,000 from for 401(k), 403(b, 457(b) and other employer plans are now available, with the ability to repay the account (if the plan allows repayment) and pay any applicable Federal income taxes over the next three years.
• The limit on retirement plan loans has been increased from $50,000 to $100,000 for loans taken from March 27, 2020 through December 31, 2020. Loan repayments can be delayed by up to one year.

^1. Based on the latter of 2018 or 2019 Federal income tax filing.
^2. RMDs for 2020 will still be required for 457(b) top hat plans.

Sources:

studentloanborrowerassistance.org/what-the-cares-act-means-for-repayment-of-federal-student-loans/

natlawreview.com/article/cares-act-expansion-unemployment-insurance-and-benefits

nytimes.com/article/coronavirus-stimulus-package-questions-answers.html

forbes.com/sites/zackfriedman/2020/03/29/should-you-really-stop-paying-your-student-loans-due-to-coronavirus/#60b01d0f4d46

Bill opens up access to 401(k) money, Los Angeles Times, March 29, 2020

Lenders appear to be flexible, Los Angeles Times, March 27, 2020