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Summary written by Brian Dudley, CFP®

Founder & COO


Last week the US Congress passed and the White House signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2 Trillion in emergency stimulus is a massive move by the US Government to try to limit the damage to people and businesses affected by this crisis. I have highlighted a few of the key components related to this bill as it may pertain to your finances. 

Payments to Individuals/Families

One of the largest provisions of the bill is the direct payment to individuals and families who qualify under the bill’s income limits. Individuals who had up to $75,000 in adjusted gross income in 2019 (or 2018 if you have yet to file) will receive a single payment of $1,200. Couples with an adjusted gross income of $150,000 will receive $2,400. In addition, taxpayers will receive an additional $500 for each qualified child (children under 17). Individuals and families who are above the income thresholds will see reduced payments of $50 per $1,000 (thus completely eliminating payments for individuals over $99,000 and couples over $198.000.,

Do retirees who use social security and required minimum distributions for their income count? Yes, as long as total adjusted gross income is under the above thresholds.

If I am a dependent on a tax return for 2019 (or ‘18 if not yet filed), can I get a check? No, the bill excludes checks for those claimed as dependents. 

Am I taxed on this money? No, as long as your income stays at or below 2019’s AGI which allows you to qualify. The checks are considered an advanced refund. As long as your 2020 AGI remains under the stated limits, you will not owe this money back to the government. This is important if you had lower income in 2019 than you will in 2020. If you make more in 2020 than in 2019, you may have to pay it back. Just be aware of this caveat. 

Retirement Plans

Congress literally just passed the SECURE Act which went into effect this year. The SECURE Act changed required minimum distribution rules for 2020 and beyond. The RMD age moved from 70 ½ to 72 and non-spouse beneficiaries are no longer offered the ability to spread their withdrawals over their lifetime (for accounts inherited in 2020 and beyond).  In addition, inherited IRAs now have to be drawn down within ten years. These rules were literally just changed this year. As if accountants don’t have enough on their plates right now, the CARES Act just added a few curveballs. Here a few of the highlights.

  1. If you have yet to take an RMD for this year, you do not have to. This also applies to inherited IRAs.

  2. If you took the IRA distribution for this year, and did so within 60 days, you can return the distribution via an indirect rollover. Please note that you can only do one indirect rollover per year. 

  3. You have the ability to withdraw funds from your IRA prior to 59 ½ without the 10% distribution if affected by Coronavirus. You will also have three years to pay it back to avoid owing tax.

  4. 401(k) max loans have been moved from $50,000 to $100,000 and 100% of the vested value can be used.

Small Businesses

The CARES Act also provides stimulus for certain small businesses that have been impacted by Coronavirus. Businesses with fewer than 500 employees will be able to take out loans (max $10MM) which will be eligible for loan forgiveness if the funds are used to cover certain expenses (rent, utilities, payroll, and group health premiums). There is a formula used to calculate the available loan amount. The forgiven loan is also not included in taxable income for the year. In addition, they added an employee retention credit and other tax incentives for those who choose to continue to pay employees throughout the crisis. More benefits include the delay of an employer’s part of the social security payroll tax until January of 2021. There is a lot here for business owners. We will be following up with business owners who are clients to see the impact of Coronavirus on their businesses and help them with strategy around this bill.

Big Businesses, State, and Local Government

There are funds ($454 billion) which will be used for emergency lending. Businesses that can benefit are airlines and those businesses that are important when relating to national security. In addition, another $150 billion will be sent to states and local governments to help offset spending used to help fight COVID-19.


Unemployment has been expanded to include an increase of $600/week for unemployment benefits for up to four months. This also included those who are self-employed or considered independent contractors (which currently is not the case). Unemployment may also be expanded by thirteen weeks if people reach the maximum amount allocated by their state. 

Charitable Donations

Limited to $300 cash donations, this above the line deduction can be added to those who do not itemize on their returns. Not a huge benefit, but a change, and this does not have a stated end date.

Federal Student Loans

Student loan borrowers can defer all student loan payments from now through September 30, 2020 and no interest will accrue on this debt. Also, this period will continue to count for loan forgiveness programs. Lastly, for a limited time, employers can compensate employees specifically to repay loans and it will not be considered income (subject to $5,250 limit per employee). 


There’s more, but we advise you to connect with us to hear how the CARES Act applies to your personal finances. I have highlighted a few of the items, but there is greater detail in each category listed in addition to other benefits when dealing with the effects of COVID-19.

We are far from this pandemic from being over. I have said that the government needs to provide stimulus and coordinate across the globe for other countries to do similar measures. This is happening. We also need to test more people, see who is healthy, and send those people back to work. This is coming. Abbott Labs just announced a 5-minute rapid COVID-19 test (think rapid strep test) and will be creating thousands of tests daily in addition to sharing their process with other labs across the country. We can then create a path back to opening the country. Most importantly, as this is all happening, scientists from across the globe are working on treatments, and ultimately, a vaccine/cure. The economy will get worse before it gets better, but there is light at the end of the tunnel. 

Thank you for your time.


Note. Family, friends, neighbors, etc. are affected by this virus and are worried. We are still working daily here at Pinnacle (remote and via advisor-only locked offices) and I am here to help. Please feel free to pass along my information to anyone who would like to discuss the impact to their finances and are wondering how we can help. 

Disclaimer. The above remarks are a summary of certain topics listed within the CARES Act bill. They are not opinions or advice, especially when dealing with taxes. We recommend that you speak with us and your accountant before acting on anything pertaining to this piece.