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The CARES Act was recently passed by Congress in response to the Coronavirus pandemic. It’s a $2 Trillion package to provide aid to both individuals and small business owners.

For individuals, the CARES Act includes stimulus checks (based on income levels), new IRA and retirement distribution options, waived Required Minimum Distributions (RMDs) from IRAs, enhanced unemployment benefits, and deferral of student loan debt payments.

Stimulus checks include $1200 per individual, $2400 for married couple, and $500 per child. You will receive the full amount if you earned less than $75,000 (single), $150,000 (married filing jointly), and $112,500 (head of household) in 2018 or 2019 (if you’ve already filed your 2019 tax return). Amounts are phased out above these levels. These checks are supposed to go out in mid-April.

With new IRA and employer-sponsored plan rules, you can take up to $100,000 out of either or both accounts combined and avoid the 10% pre-59 1/2 penalty. However, you will still owe taxes on your distribution but have 3 years to pay the tax. Or, you can put the funds back into your account(s) within 3 years and avoid the tax.

For individuals who are over 70 1/2, your RMDs (Required Minimum Distributions) are waived for 2020. This is good news as RMDs this year would be valued on your retirement account balances as of December 31, 2019 (when they were a lot higher most likely). Basically you just skip the distribution this year.

For small business owners, the two primary programs I cover in this episode are the Economic Injury Disaster Relief Program and the Paycheck Protection Program. The Economic Injury Disaster Relief program is directly through the SBA and allows small business owners to request an advance/grant of $10k regardless if you qualify for an actual loan.

The Paycheck Protection Program is a loan program based on 2.5x your trailing 12 month average monthly payroll (excluding amounts above $100k per person). This loan can be forgiven if 75% of your proceeds apply to payroll costs and you deploy the funds with 8 weeks of the loan origination date.

The Paycheck Protection Program is being handled by banks that are approved SBA(7a) lenders, which includes most big banks. Check with your local bank to learn more.

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