Happy Friday! Last week’s letter came just before Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The full text is nice light reading at 335 pages. Not likely many of us have added this to the bedside table yet, but we’re guessing you’ve seen plenty of news and takes on it over the past week. Again, we’re not here to report news but looking back to the questions we posed last week, we’d like to share a few thoughts about what it means and what you might do.
First, think of the CARES Act as primarily an attempt to bridge the income gap for Americans during the virus-induced quarantine where many people are facing job loss and/or a significant hit to income. Indeed, we’ve seen 10 million new claims for unemployment insurance in the past two weeks, just one example of how swift the impact has been on the economy. There are many ways the government is trying to create this income bridge, including: forgivable small business loans, direct payments to families (subject to income phaseout and caps), and expanded and extended unemployment benefits. The estimated total value of the relief package is a remarkable $2.3 trillion and more measures may yet be announced depending on how quickly the economy can get back up and running.
Many of our friends and clients are eligible for the relief promised by these programs and we’d encourage you to take the opportunity to get educated on your options. We know many of you already have. In addition to the the measures for individuals and businesses already mentioned, here are some other key provisions we wanted to be sure you were aware of:
- The Federal income tax filing deadline for 2019 was extended to 7/15 from 4/15. This also extends the deadline for IRA and HSA contributions for the 2019 tax year.
- Required Minimum Distributions (RMDs) are waived for some retirement accounts in 2020. In other words, if you don’t need the money you don’t have to take it this year. Accounts covered by this provision include traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b) and 457(b).
- Other retirement account rules have been relaxed as well including the waiver of the 10% early withdrawal penalty on up to $100,000 if experiencing hardship related to COVID-19 and expanded borrowing flexibility in workplace retirement plans.
Talk about a lot to metabolize! We know that you are dealing with an incredible amount of new information and certainly wouldn’t blame you if you felt confused or overwhelmed by it. We’re working hard to get our arms around it too.
Just know that we’re here to be a help and a resource to you. We will of course do our best to proactively reach out to you individually if we see specific opportunities or ways you may be impacted by these changes. We also wholeheartedly encourage you to reach out if you, friends or family need help navigating all of this and turning it into productive forward motion. We’d welcome the conversation.
Enjoy the weekend. And in these trying times—stay well, stay connected to loved ones (even if physically apart), and stay optimistic.