In this month's Educating Edison, we decided to skip a video so we could provide you greater detail on The Coronavirus Aid, Relief, and Economic Security Act (H.R. 748), also known as the CARES Act that passed last week. The CARES Act is the $2 Trillion Stimulus aid package aimed at helping individuals and businesses.  There is a lot of aspects to the Act, so we thought it would be ideal for us to provide some highlights that may impact you. If you don’t see a topic below that you would like to understand, please contact us.

Who Will Get a Stimulus Check?

-  Under the plan, individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child. The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children.

-  Married couples would each receive a check and families would get $500 per child. That means a family of four earning less than $150,000 can expect $3,400.

-  The cash payments are based on either your 2018 or 2019 tax filings. People who receive Social Security benefits but don't file a tax return are still eligible, too. They don't need to file taxes; their checks will be based on information provided by the Social Security Administration.

For more details, we have linked an article for your review. Click here.

Retirement Savings Provisions

-  Penalty-free withdrawal from your retirement plan. If you are younger than 59½, you are normally subject to a 10 percent early withdrawal penalty on top of the income tax owed on your withdrawal. The CARES Act waives the 10 percent penalty for IRAs and defined contribution plans for participants experiencing financial hardship.

-  Retirement plan loan amount is doubled allowing you to borrow up to $100,000 from your 401(k). The existing rule that loans may not exceed half the vested account balance has been removed as well. 

-  Required minimum distributions (RMDs) are suspended for 2020. Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 72 (70 ½ if you reach 70 ½ before January 1, 2020), if later, the year in which he or she retires.

For more details, we have linked an article for your review. Click here.

Extra Unemployment Benefits

-  This ACT adds $600 per week from the federal government on top of whatever base amount a worker receives from the state. That boosted payment can last for four months.

-  The legislation adds 13 weeks of additional unemployment insurance. People nearing the maximum number of weeks allowed by their state would get an extension. New filers would also be allowed to collect the benefits for a longer period.

-  Typically, self-employed people, freelancers, and contractors can't apply for unemployment. This ACT creates a new, temporary Pandemic Unemployment Assistance program through the end of this year to help people who lose work as a direct result of the public health emergency.

The ACT increases the benefits and broadening who is eligible. States will continue to pay unemployment to people who qualify. That amount varies state by state. So does the amount of time people can claim it. 

Other Notable Areas

-  Small Business- The ACT is intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain non-profits and other employers. Click here to view the US Chamber of Commerce Small Business Guide and Checklist. 

-  Insurance Coverage- The ACT requires all private insurance plans to cover COVID-19 treatments and vaccines and makes all coronavirus tests free.

We have been helping SCE employees with their financial planning and investment needs since 2007. The CARES Act has several more benefits than those listed above. Our goal is to provide highlights in the areas that will most likely impact you. We realize the market uncertainty may be causing the need to revisit your asset allocation or financial plan.  If you would like to schedule a time to discuss The CARES Act or to start a complimentary financial review, please click here to schedule a call.