CARES Act and Coronavirus Stimulus Retirement Changes
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  2. CARES Act and Coronavirus Stimulus Retirement Changes

What are the different provisions of the CARES Act/Coronavirus response bill that I need to know?

The CARES Act allows for tax-free IRA distributions and enhanced Solo 401(k) loans, as well as many other provisions that affect personal finance.

This article was last updated on May 8th. Many provisions of the CARES Act, as well as new legislation/government responses, are developing from week to week. 

What is the CARES Act?

Coronavirus Aid, Relief, and Economic Security Act is a bill passed by Congress in 2020 to respond to the rapidly evolving situation around COVID-19, unemployment, and disruption to income Americans are facing due to shelter at home restrictions and closing of non-essential businesses across the country. 

How will this affect my retirement accounts?

When do I have to file my taxes and make sure I have contributions in for my IRS? 

What other personal finance implications are there?

Economic Impact Payments/Stimulus checks with a max of $1200 will be sent to qualifying Americans by the IRS.

  • Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.

  • The check amount decreases by $5 per every $100 earned after $75,000, zeroing out at $99,000. For married couples, the phase-out range is $150,000 to $198,000. Calculate how much you will receive in a check here. 
  • Those with children marked as dependents and under 17 will receive $500 more in employment insurance. 
  • Checks will be sent the fastest to Americans who have direct deposit information with the IRS and have started arriving for Americans that . For Americans who do not have direct deposit information on file with the IRS, they can file their 2019 return or... vist this IRS website. Keep in mind the website might be under high load if it cannot immediately process your information.
  • The IRS will automatically use a person's 2019 return to calculate eligibility and automatically send money to those that qualify. If someone hasn't filed a 2019 return, it will be based on the 2018 return. The IRS said Americans who weren't required to file taxes in the last two years would have to file a "simple tax return" with basic information like filing status, the number of dependents, and bank information so the government can send the money.
  • These first of these payments expected to "go out in three weeks" from now around the week of April 23, according to Steve Munichin from NBC News as of March 31, 2020.   As of May 7th, if you have not received your check, and have had trouble with the IRS's website, the fastest way to receive it would be to file your 2019 taxes along with direct deposit banking information.  

Enhanced Unemployment Insurance

Those receiving unemployment insurance through their states’ unemployment insurance receive an additional $600 a week for four months. That’s in addition to what states already pay, which has been extended an additional 13 weeks.

The Act provides federal funding for unemployment compensation to workers who are adversely affected by COVID-19. In particular, the workers eligible for benefits are workers who are not otherwise already covered by state unemployment compensation laws or workers who have already exhausted their benefits. These unemployment benefits apply even to independent contractors, self-employed people, and workers in the gig economy.

Such "covered individuals" include those who are otherwise able and available to work but are unemployed, underemployed or unable or unavailable to work because:

  • they have been diagnosed with COVID-19;

  • they have symptoms of COVID-19 and are seeking a diagnosis;

  • a member of their household has been diagnosed with COVID-19;

  • they are providing care for a family or household member who has been diagnosed with COVID-19;

  • they cannot reach their place of employment because of a quarantine imposed as a direct result of COVID-19;

  • they cannot reach their place of employment because a health care provider has advised them to self-quarantine due to COVID-19;

  • they were scheduled to start employment and do not currently have a job, or they are unable to reach the job as a direct result of COVID-19;

  • they have become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;

  • they had to quit their job as a direct result of COVID-19;

  • their place of employment is closed as a direct result of COVID-19; or

  • they meet any additional criteria established by the Secretary of Labor for assistance.

As noted above, also eligible are self-employed individuals, individuals seeking part-time employment, individuals who do not have sufficient work histories, and those who would not qualify for regular unemployment or extended benefits under state or federal law.

Subtitle A also allows states to enter into agreements with the federal government to enhance existing state unemployment compensation programs. For example, Subtitle A provides for immediate payment of benefits by avoiding waiting periods. Importantly, the Subtitle also provides for an additional $600 per week of benefits for up to four months, even if the worker currently is making less than that. Finally, the Subtitle extends the benefit period up to 39 weeks, an increase of 13 weeks over the current 26-week limit.

This part of the Act also provides an opportunity for states to enter into an agreement with the federal government under which a state can receive funding for "short-time compensation" programs, which will subsidize employees whose hours have been reduced but have not been laid-off.


What If I'm a contractor or self-employed?

The Act notably extends unemployment insurance benefits to the self-employed and independent contractors—groups that typically don’t qualify for assistance. It allows anyone who couldn’t work because of coronavirus to receive benefits. That includes those who were laid off, became ill, or had to care for someone else with coronavirus.


What about my Mortgage Payment?

Holders of federally backed mortgages AND lost their jobs can request forbearance if they have been affected by COVID-19.

If approved by the bank, the borrower won’t have to pay the mortgage for 180 days. The bank can’t impose any penalties or other fees. This relief can be extended another 180 days. Banks must halt foreclosure proceedings until May 18, 2020. You can contact your mortgage holder to request forbearance.

What about student loans?

  • The below only applies to federal loans and not federal Perkins loans or private loans.
  • Student Loans have up to a six-month suspension of interest payments, with no interest charged.
  • The moratorium is expected to be automatic, and no paperwork needs to be filed.
  • All payments during this moratorium will go principal, not interest.
  • Involuntary collection of payments on defaulted federal loans is halted. 
  • Employees who receive employer-paid student loan payments do not have to claim these benefits as income for the entire 2020 calendar year, up to a maximum of $5,250
  • Colleges and Univsericites can continue to pay federal work-study students for up to one year if an employer or university is closed due to the coronavirus pandemic. 
  • Source

Where can I check out more information from the IRS? has news releases, press releases, and official IRS communications. 

What if I'm a business owner?

What about Small Business Loans other than a Solo 401(k)?

What about the Paycheck protection program?

What about business taxes?

All businesses, regardless of size, are eligible for a 50% refundable payroll tax credit. The credit is applied toward the first $10,000 of an employee’s wages. The business must demonstrate a 50% reduction in receipts compared to the same quarter in 2019. Employers’ portion of the Social Security payroll tax can be delayed until January 1, 2021.

What about paid sick leave for myself or my employees and business?