Coronavirus aid, Relief and Economic Security (CARES) Act of 2020

$2.5 trillion stimulus package passed on March 27, 2020, aimed at providing some financial relief to small businesses and their employees amid the coronavirus pandemic.

How does this affect retirees?

Temporary waiver of Required Minimum Distribution (RMD) rules

  • Participants who have or are required to take a minimum distribution in 2020 based on the value of their December 31, 2019 account balance now have the option to suspend their distribution. Those who have seen a decline in their retirement accounts in 2020 can now opt to take their distribution at a later time when their account balance has potentially stabilized.

How does this affect workers?

Penalty-free coronavirus related distributions in 2020

  • The Act allows affected retirement plan participants to take distributions in 2020 of up to $100,000 from a retirement plan or IRA and these withdrawals are not subject to mandatory 20% withholding and do not incur the 10% early distribution tax that normally applies to payments made prior to age 59½.
  • The income taxes due on the distribution amount are optionally includable over a three-year period.
  • The distribution may be repaid to an eligible retirement plan or IRA within three years of taking the distribution


Loan dollar limits increased temporarily

  • The maximum loan amount that an impacted individual may borrow from their retirement plans is temporarily increased from 50% to 100% of their total vested account balance, up to $100,000 (from $50,000) .
  • Impacted employees may also have their loan repayments suspended for up to 12 months for repayment due dates between the date of enactment through December 31, 2020.


How does this affect your business?

  • Paycheck Protection Program – This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.
  • Deferral of Payroll Taxes – Employers will be permitted to defer payment of payroll taxes
  • Social Security Tax Deferral – IRS update guidance that permits employers to defer the deposit and payment of the employer’s portion of social security taxes that otherwise would be due between March 27, 2020 and December 31, 2020.
  • Economic Injury Disaster Loan – This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties and up to a $200,000.00 dollar loan at 3.75% fixed rate, amortized over 30 years.


Disclosure: Please note, changes in the tax laws may occur at any time and could have a substantial impact upon each person’s situation. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.. Content provided herein is based on our interpretation of the CARE Act Stimulus and is not intended to be legal advice or provide a tax opinion. This document is a summary only and not meant to represent all provisions within the CARE Act Stimulus.