CARES Act – The Coronavirus Relief Package

Steve Lear |

Five Key Takeaways for Individuals

On March 27, 2020 the U.S. government passed the largest economic stimulus package in U.S. history. The approximately $2 Trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides emergency relief to individuals, families, and businesses impacted by the coronavirus pandemic.

Making sense of the massive bill has been no easy undertaking. But as more details have been released, a clearer picture of what the bill means to individuals has come into focus. Here are what we see as the five key takeaways:

  1. Cash Payments

The Treasury Department is issuing tax rebates in the form of cash payments. Most individuals will receive a one-time payment of up to $1,200, with married couples filing jointly receiving up to $2,400, plus $500 per qualifying child (a dependent child age 16 or under). Payments are limited based on adjusted gross income (AGI). Payments are reduced for individuals with AGI of more than $75,000 or couples with AGI of more than $150,000, and disappear completely when AGI reaches $99,000 and $198,000, respectively.

If you filed taxes in 2019 or 2018, or you receive Social Security benefits, and the IRS has your bank account information, payments will be sent automatically via electronic transfer. No action is required on your part. The IRS is working on logistic solutions for getting cash payments to individuals who may not fit this criteria.

What this might mean for you:

  • Immediate cash flow relief for those who have felt the financial effects of COVID-19.
  • Those fortunate enough not to need this payment for meeting immediate needs, consider adding it to your emergency fund or saving it for retirement or another financial goal.


  1. RMD Relief

Required minimum distributions (RMDs), normally mandated for IRAs and workplace retirement plans, have been waived for 2020. This includes first-time RMDs for people who turned 70 ½ in 2019, but did not take their first RMD by December 31, 2019. The RMD waiver applies to all individuals, not only those affected by the coronavirus.

What this might mean for you:

  • If you do not need money from your IRA or workplace retirement plan in 2020, the CARES Act gives you options. Talk to your advisor about what, if any, changes makes sense for your unique situation.


  1. Delayed tax filing deadlines

The due date to file and pay 2019 federal income taxes has been extended from April 15 to July 15, 2020. The same extension has been granted for Minnesota state taxes, as well as state taxes in many other states. Along with that change, the deadline for making 2019 IRA contributions is also extended to July 15, 2020, as is the deadline for first quarter 2020 estimated taxes (but second quarter 2020 estimated taxes will still be due June 15, 2020).

What this might mean for you:

  • If you are likely to owe taxes, waiting until July to file and pay could provide some cash flow relief and/or emergency reserve cushion during these challenging times.
  • If you are considering contributing to an IRA for tax year 2019, it may be prudent to wait until July to make a final decision – as your financial picture may be clearer by then.


  1. Enhanced Unemployment benefits

Unemployment benefits have been enhanced in response to the coronavirus in several ways. The CARES Act provides for an additional $600 weekly benefit though July 31, 2020, and an additional 13 weeks of federally funded unemployment benefits, extending benefits to up to 39 weeks depending on state laws.

In addition, the CARES Act provides unemployment benefits to many people who would not normally qualify, such as self-employed individuals, independent contractors, and part-time workers.

What this might mean for you:

  • If you become unemployed in 2020, you may be eligible for enhanced benefits. 


  1. Access to Retirement Assets

If you face adverse financial consequences as a result of the coronavirus, you have the option to access money in an IRA or workplace retirement plan. An early withdrawal of up to $100,000 can be taken without penalty (normally a 10% early-distribution penalty applies to distributions made prior to age 59 ½). Distributions from tax-deferred accounts, such as Traditional IRAs, will still incur income taxes, but the taxes can be spread over three years. You also have the option to repay the distribution within three years, in which case any taxes paid would be returned.

Another option for accessing retirement assets is taking a workplace retirement plan loan (if the plan allows). Until September 23, 2020, limits on workplace retirement plan loans have been expanded to $100,000 or 100% of your vested account balance, whichever is smaller. Some repayment delays are also provided, even for loans taken out before the crisis.

Unlike the RMD waiver, which applies to everyone, the CARES Act provisions for access to retirement assets only applies to those affected by the coronavirus.

What this might mean for you:

  • Accessing money that has been saved for retirement is something we generally try to avoid at all costs. However, talk to your advisor if the coronavirus has caused you significant financial stress. In this unique circumstance, one of these options might make sense.

In addition to these five key items, the federal government has taken several other steps to help individuals. These include:

  • Health insurance plans must cover testing, treatment, and potential vaccines for the coronavirus.
  • Federal student loan payments have been granted an automatic six-month suspension, through September 30, 2020.
  • Taxpayers that do not itemize can take “above the line” deductions for qualified charitable contributions of up to $300 in 2020.

The CARES Act also contains several relief provisions for businesses, including loans and deferrals for employment tax payments. If you are a business owner, we recommend discussing your options with your accountant or banker.

Everyone has been affected by the coronavirus in one way or another. But for some, the financial hardships may be substantial. In passing the CARES Act, the U.S. government created opportunities to ease these hardships. If your financial situation has changed because of the coronavirus, reach out to your Affiance Financial advisor today. We can help you evaluate your options and make any necessary adjustments to your long-term financial plan.



This blog post is intended to be a brief summary of five takeaways from the CARES Act and does not constitute advice. Due to the generality of this update, the information provided may not be applicable in all situations and should not be acted upon without specific advice. No client or prospective client should assume that this content serves as the receipt of, or a substitute for, personalized advice from Affiance Financial, or from any other professional. Please remember to contact Affiance Financial if there are any changes in your personal/financial situation or investment objectives.​