Coronavirus Aid, Relief and Economic Security Act (CARES Act)

Following weeks of bipartisan efforts, President Donald Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) on March 27th, 2020. The bill includes temporary, but meaningful, changes to laws relating to income planning for 2020. From the retirement planning perspective, notable provisions of the CARES Act include:

  • 2020 Recovery Rebates
    • Based on 2019 adjusted gross income (AGI)
      • If 2019 return hasn’t been filed yet, it’s based upon 2018 AGI
    • Rebate equals up to $1,200 per individual and $500 per qualifying child (under age 17)
    • Rebate is a 2020 tax credit, and the amount each household is eligible for will be revisited upon filing 2020 taxes
      • If eligibility has changed upon 2020 tax filing, the additional amount owed to (or owed by) the IRS will be included in 2020 tax due (or tax return).
    • Phase-out table:
Filing Classification Phaseout Begins Phaseout Ends
Single $75,000 $99,000
Head-of-Household $112,500 $148,500
Married Filing Jointly $150,000 $199,000
  • The elimination of the 10% early withdrawal penalty on distributions from retirement accounts for so-called “Coronavirus-Related Distributions”
    • This provides the option to spread income taxation over three years, and the ability to recontribute back to those same accounts to make up in the future
    • Maximum Coronavirus-Related Distributions per individual is $100,000
  • The suspension of required minimum distributions (RMDs) in 2020 for a wide variety of retirement account for account owners and beneficiaries
    •  This includes the ability to return current-year distributions
  • An increase of $600 per week for unemployment benefits for up to four months as well as an expansion of benefits for those who would otherwise not normally qualify (like self-employed individuals and independent contractors)
  • Deferral of Federal student loan payments and interest through September 30, 2020.
  • Delayed deadline for tax filing from April 15th, 2020 until July 15th, 2020
  • Deadline to contribute to a Traditional, SEP, and Roth IRA is also delayed to July 15th, 2020

Pursuing your financial goals requires understanding the market as laws and regulations change. Olson Wealth Group has been closely monitoring this legislation since the bill came to public attention. We look forward to working with you regarding your personal retirement goals and taking advantage of these new opportunities.  We appreciate your partnership and your trust and confidence and are committed to serving you with clarity of information and the wisdom applied to new planning techniques. 

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please consult your financial advisor regarding your specific situation.

The content provided herein is based on our interpretation of the CARES Act and is not intended to be legal advice or provide a tax opinion. This content is a summary only and not meant to represent all provisions within the CARES Act.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

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