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CARES Act Provides Relief to Individuals and 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. Major 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


Recovery rebates

Most individuals will receive a direct payment from the federal government. Technically a 2020 refundable
income tax credit, the rebate amount will be calculated based on 2019 tax returns filed (2018 returns in
cases where a 2019 return hasn't been filed) and sent automatically via check or direct deposit to qualifying
individuals. To qualify for a payment, individuals generally must have a Social Security number and must
not qualify as the dependent of another individual.

The amount of the recovery rebate is $1,200 ($2,400 if married filing a joint return) plus $500 for each
qualifying child under age 17. Recovery rebates are phased out for those with adjusted gross income (AGI)
exceeding $75,000 ($150,000 if married filing a joint return, $112,500 for those filing as head of household).
For those with AGI exceeding the threshold amount, the allowable rebate is reduced by $5 for every $100
in income over the threshold.

Rebate Amounts and Phaseout Ranges

Filing Status Payment Amount Phaseout Threshold Phaseout Completed
Married Filing Jointly $2,400 $150,000 $198,000
+ 1 Child $2,900 $150,000 $208,000
+ 2 Children $3,400 $150,000 $218,000
Head of Household $1,200 $112,500 $136,500
+ 1 Child $1,700 $112,500 $146,000
+ 2 Children $2,200 $112,500 $156,000
All Others $1,200 $75,000 $99,000

While details are still being worked out, the IRS will be coordinating with other federal agencies to facilitate
payment determination and distribution. For example, eligible individuals collecting Social Security benefits
may not need to file a tax return in order to receive a payment.


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

• The 10% early-distribution penalty tax that would normally apply to distributions made prior to age 591⁄2
(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


Student loans

• The legislation provides a six-month automatic payment suspension for any student loan held by the
federal government; this six-month period ends on September 30, 2020

• Under already existing rules, up to $5,250 in payments made by an employer under an education
assistance program could be excluded from an employee's taxable income; this exclusion is expanded
to include eligible student loan repayments an employer makes on an employee's behalf before January
1, 2021


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 a steady stream of guidance forthcoming with details relating to many of these
provisions, so stay tuned for more information. We're here to help and to answer any questions you may

For more information on how CAMPUS Investment & Trust Services can assist you, click here to schedule a no-cost, no-obligation consultation. 


Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Trust services available through MEMBERS Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. FR-3052263.1-0420-0522

By Campus USA at 21 Apr 2020, 09:36 AM

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