CARES Act Provides Relief to Workers & Businesses
On Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. This $2 trillion emergency relief package is intended to assist individuals and businesses during the ongoing coronavirus pandemic and accompanying economic crisis. Some of the relief provisions are summarized here.
Unemployment provisions
The legislation provides for:
An additional $600 weekly benefit to those collecting unemployment benefits, through July 31, 2020
An additional 13 weeks of federally funded unemployment benefits, through the end of 2020, for individuals who exhaust their state unemployment benefits
Targeted federal reimbursement of state unemployment compensation designed to eliminate state one-week delays in providing benefits
Unemployment benefits through 2020 for many who would not otherwise qualify, including independent contractors and part-time workers
Retirement plan provisions
Required minimum distributions (RMDs) from employer-sponsored retirement plans and IRAs will not apply for the 2020 calendar year; this includes any 2019 RMDs that would otherwise have to be taken in 2020
The 10% early-distribution penalty tax that would normally apply to distributions made prior to age 59½ (unless an exception applies) is waived for retirement plan distributions of up to $100,000 relating to the coronavirus; special re-contribution rules and income inclusion rules for tax purposes apply as well
Limits on loans from employer-sponsored retirement plans are expanded, with repayment delays provided
Business relief
An employee retention tax credit is now available to employers significantly impacted by the crisis and is applied to offset Social Security payroll taxes; the credit is equal to 50% of qualified wages up to a certain maximum
Employers may defer paying the employer portion of Social Security payroll taxes through the end of 2020 and may pay the deferred taxes over a two-year period of time; self-employed individuals are able to do the same
Net operating loss rules expanded
Deductibility of business interest expanded
Provisions relating to specified Small Business Administration (SBA) loans increase the federal government guarantee to 100% and allow small businesses to borrow up to $10 million and defer payments for six months to one year; self-employed individuals, independent contractors, and sole proprietors may qualify for loans
Prior legislative relief provisions
Signed into law roughly two weeks prior to the CARES Act, the Families First Coronavirus Response Act (FFCRA) also included relief provisions worth noting:
Requirement that health plans cover COVID-19 testing at no cost to the patient
Requirement that employers with fewer than 500 employees generally must provide paid sick leave to employees affected by COVID-19 who meet certain criteria, and paid emergency family and medical leave in other circumstances
Payroll tax credits allowed for required sick leave as well as family and medical leave paid
There is likely to be much more information and guidance forthcoming with details relating to many of these provisions. Contact MNM Vested, LLC to stay informed.
