Coronavirus Disease 2019 - Stimulus Packages and Related Relief
Summary of Key Financial Considerations
April 30, 2020

As financial and health concerns grow nation and worldwide, the United States government passed four economic measures (Phases 1, 2, 3, and 3.5, discussed below), in addition to other specific tax relief measures, to address the Coronavirus Disease 2019 (“COVID-19”) pandemic. Below is a summary of key financial considerations potentially benefiting our Beacon Pointe clients in their capacities as both individuals and business owners.

Economic Measures and Tax Relief

Between March 6, 2020, and April 24, 2020, President Donald J. Trump signed four pieces of legislation into law to aid in the ongoing relief efforts.

“Phase 1” The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (March 6, 2020):Phase 1 provided an immediate public health response to the crisis, primarily designed to assist with treatment and prevention efforts, including COVID-19 vaccine research and development.

“Phase 2” The Families First Coronavirus Response Act (“The Families First Act”) (March 18, 2020): Phase 2 delivered initial relief for individuals, with provisions expanding paid sick and family leave, unemployment insurance benefits, and food assistance.

“Phase 3” The Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”) (March 27, 2020): Phase 3 enveloped an extensive economic stimulus, providing for individuals as well as small and large businesses.

“Phase 3.5” The Paycheck Protection Program and Health Care Enhancement Act (April 24, 2020): Phase 3.5 provided additional funding for the Paycheck Protection Program and the Emergency Injury Disaster Loans, as well as for healthcare providers and hospitals.

Further, in various notices, the Treasury Department and Internal Revenue Service (“IRS”)  extended the due date of various Federal income tax return filing deadlines, related tax payments, and other administrative actions.

Direct Payments to Individuals – Recovery Rebate Advance

Eligible individuals may receive a one-time rebate up to $1,200, and married couples will receive $2,400, plus an additional $500 per child under the age of 17. Although you will claim this rebate as a refundable tax credit on your 2020 tax return, the threshold is based on your adjusted gross income (“AGI”) reported on your most recent Federal tax return filed, either 2018 or 2019. The full amount of the rebate will be available for incomes up to $75,000 for individuals with no dependents and $150,000 for married couples with no dependents. The rebate amount begins to phase-out $5 for each $100 over AGI of $75,000 ($150,000 for married couples filing jointly).  If you are receiving Social Security or Veterans benefits (and are not otherwise required to file an income tax return), your rebate will be based on your 2019 benefits.

If you are not currently eligible for the rebate because your 2018 or 2019 income was over the threshold, you may still be eligible to claim the credit on your 2020 tax return if you experienced a change in circumstances this year (i.e., decrease in income, birth of a child not previously claimed). In contrast, if the advanced rebate is higher than the actual credit you should be entitled to based on your 2020 income, you will not be required to repay the excess credit.

PLANNING TIP: If you have not already filed your Federal income tax returns for 2019, compare your 2018 and 2019 Federal AGI to determine whether it is more beneficial to delay your 2019 Federal tax filing. If your income was lower in 2019 than 2018, you should file your 2019 return immediately. Conversely, if your income was higher in 2019, consider postponing filing until after the advance is processed.

Emergency Injury Disaster Loans (“EIDL”)

Likely the first place to turn to for liquidity for small businesses and self-employed individuals are the Economic Injury Disaster Loans (“EIDL”) expanded by the CARES Act provided by the Small Business Administration (“SBA”). The EIDL provides a cash advance of $1,000 per employee up to $10,000, based solely on the credit score of the business owner, and the cash advance does not have to be repaid. The amount of the advance is determined by the number of employees as of January 31, 2020. More specifically, the emergency grant is a cash advance of the funds the applicant would have received through the EIDL program. Even if the SBA subsequently rejects your EIDL loan application, you are not required to repay the grant. If a borrower applies for EIDL, the advance amount will reduce the amount forgiven under the Paycheck Protection Program (“PPP”) discussed below. The EIDL initially ran out of funding. However, the EIDL program received additional funding under “Phase 3.5” of the legislative response signed into law on April 24, 2020. However, as of today, April 30, 2020, the SBA is not taking new applications yet, as they are processing applications that were already in the queue. For additional and up to date information, visit the SBA directly at

Small Business Loans – Paycheck Protection Program (“PPP”)

Likely the second place a business owner or self-employed individual would turn to for liquidity is the Paycheck Protection Program (“PPP”) created by the CARES Act, also guaranteed by the SBA. The Act authorizes the SBA to make up to $349 billion in potentially forgivable loans to small businesses and self-employed individuals with 500 employees or less and does not require a personal guarantee, collateral, or any pledged asset. Small non-profits, including religious institutions, may also qualify. The maximum amount of the loan is 2.5 times the average monthly payroll cost (excluding employee compensation greater than $100,000 per employee), up to $10 million. As provided within subsequent Treasury Guidance, the PPP is a 2-year loan with a fixed interest rate of 1%, is fully guaranteed by the SBA, and must be applied for no later than June 30, 2020. Loan payments may be deferred for six months.  The PPP program also ran out of funding but received additional funding under “Phase 3.5” of the legislative response signed into law on April 24, 2020. Banks are still accepting applications and are processing loans. Depending on your bank, processing times will vary.  Work with your banker or visit for up to date information.

Loan Forgiveness According to the Treasury Department, loan amounts may be forgiven as long as the proceeds are used to cover payroll costs of up to $100,000 per employee (including group health insurance premiums), most rent and mortgage interest, and utilities, as long as employee and compensation levels are maintained for the eight weeks after receiving the loan proceeds. It is likely not more than 25% of the forgiven amount may be for non-payroll costs. Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 on an annualized basis, or if you reduce your full-time employee headcount. You have until June 30, 2020, to restore your full-time employment and salary levels from any changes made between February 15 and April 26th, 2020.  Unlike the typical treatment of forgiven loans, the forgiveness of a PPP loan will not be considered taxable income to the business.  To request forgiveness, submit a request to the loan servicer, including documentation that verifies the requirements above, and the lender will determine the forgiveness amount within 60 days. The process will become clear as the SBA issues guidance to lenders.

Employee Retention Credit

Employers not taking a loan under the PPP may qualify for a refundable tax credit if operations have been fully or partially shut down due to governmental authority, or revenue in 2020 is less than 50% of the same quarter in 2019 because of COVID-19.  The credit is 50% of qualified wages up to $10,000 of wages per employee (a maximum credit of $5,000 per employee). If your business is eligible, the credit is realized immediately by reducing the Social Security portion of payroll taxes paid on Form 941 beginning with the second quarter. Businesses will continue to qualify for the credit until the end of 2020; or depending upon the method of qualification for the credit, there is either a quarter without a government-required suspension of operations, or the gross revenue from the current quarter exceeds 80% gross revenue from the same calendar quarter in 2019, whichever is sooner. Work with your CPA and/or payroll provider to take advantage of the credit. If Social Security tax deposits are not sufficient to cover the entire credit, the employer may receive an advance payment from the IRS by submitting Form 7200. Additional information about the employee retention credit is available here. Additional tax credits potentially available to small and mid-sized businesses may be reviewed here.

Enhanced Unemployment Benefits 

The CARES Act expands unemployment benefits under three temporary programs, the Pandemic Unemployment Assistance (“PUA”), the Pandemic Emergency Unemployment Compensation program (“PEUC”), and the Federal Pandemic Unemployment Compensation program (“FPUC”). Through these three programs, the Act offers workers entitled to unemployment insurance benefits, as well as those individuals that are not otherwise eligible for state unemployment benefits,  extended benefits by increasing the length of time unemployment insurance benefits are payable by an additional 13 weeks, providing up to 39 weeks of unemployment benefits to those not otherwise eligible, and increases the amount of the unemployment insurance benefits by an additional $600 per week through July 31, 2020. The Act also eliminates the one week waiting period making benefits payable as of the filing date. Generally, the fastest way to apply for unemployment insurance benefits is online and will vary by state.

Retirement Planning

Waiver of Required Minimum Distributions (“RMDs”) The CARES Act suspends RMDs for certain retirement plans, including 401(k)s, SEP IRAs, IRAs, and 403(b)s for the calendar year 2020 for both retirement account owners and inherited IRA beneficiaries. RMDs are also waived for retirement account owners who turned 70½ in 2019 but deferred the first RMD to April 1, 2020. You do not have to withdraw either the amount deferred from last year or an RMD for 2020.

For account owners who have already taken an RMD for 2020, the distribution is now not considered an RMD, which means you may be able to roll the distribution back into your retirement account through a 60-day rollover. If your withdrawal and subsequent rollover to return the funds to your account occur within 60 days of each other, and you have not already processed another 60-day rollover within the last 12 months, then you should not owe taxes on the distributed amount. Be sure though, if taxes were withheld from your RMD, you use your own funds to return the full amount of the distribution to your account and file for a refund for taxes paid when you file your 2020 return. Otherwise, you will owe taxes on the amount not repaid.

For account owners who took an RMD between February 1 and May 15, the IRS extended the due date of any 60-day rollovers to July 15. The extension does not provide relief to clients that took RMDs in January. If the 60-day rollover window passed, you may still be able to roll over an RMD taken in 2020 as a Coronavirus-Related Distribution (described below), which allows you up to three years to return the distribution to your retirement account.  There are no rollovers allowed for beneficiaries of inherited IRAs, unfortunately.

Coronavirus-Related Distributions and Loans from Retirement Accounts The CARES Act allows for distributions of up to $100,000 from IRAs and employer-sponsored plans and waives the 10% early withdrawal penalty for those under 59½ years of age. Further, the mandatory tax withholdings (generally, at least 20%) are waived. The Act allows participants to avoid taxation if the distribution is repaid within 3 years or allows participants to stretch the inclusion of income from taxable distributions over 3 years (2020, 2021, 2022). The CARES Act doubled the borrowing limits from employer-sponsored plans to the lesser of $100,000 (reduced by other outstanding loans) or 100% of the account balance from the previous limit of the lesser of $50,000 or 50% of the account balance.

PLANNING TIP: If you have already taken an RMD for this year within the past 60 days (and you have not completed another 60-day indirect rollover in the last twelve months), consider rolling that amount back into your IRA as it will qualify as an indirect rollover. Alternatively, work with your CPA to contribute the same amount (including the amount withheld for taxes) to a Roth IRA to convert the amount of the RMD, which will allow that amount to grow tax-deferred and ultimately distributed tax-free.

Miscellaneous Provisions 

Income Tax Deferrals In IRS Notices 2020-2018, 2020-20, and 2020-23, the IRS and Treasury Department announced that most Federal tax obligations, including, but not limited to filing of returns, various tax payments, and other administrative actions that were due between April 1, 2020 and July 14, 2020 are now deferred to July 15, 2020. Any related interest and penalties are waived. Correspondingly, taxpayers may defer filing most tax returns and payments previously due on April 15, 2020, to July 15, 2020. Further, first and second quarter 2020 estimated Federal income tax payments are deferred until July 15, 2020. Read the IRS’ Filing and Payment Deadlines Questions and Answers here.

PLANNING TIP: If you expect a refund related to your 2019 Federal tax return, you are encouraged to file your return as soon as possible to have access to funds owed to you.  Because the filing due date was delayed, contributions can be made to an IRA for 2019 through July 15, 2020.

New Above-The-Line Charitable Contribution Deduction and Suspension of AGI Limitations To incentivize charitable contributions, the CARES Act: (1) creates a new $300 above the line charitable deduction for certain cash charitable contributions (and surprisingly, is not temporary for 2020); and (2) suspends the AGI limitation entirely on certain cash charitable contributions. Specifically, beginning in 2020, an eligible individual that does not itemize deductions on his or her income tax return is eligible for an above-the-line deduction of up to $300 for “qualified charitable contributions.” Secondly, individuals itemizing deductions may deduct up to 100% of AGI for cash contributions in 2020, potentially eliminating all tax liability through charitable donations. A qualified charitable contribution in this regard is a cash contribution made in 2020 to a qualified tax-exempt organization, which does not include supporting organizations or donor advised funds. Note that charitable cash contributions carried over from a prior year are not eligible. Any excess qualified contributions are carried forward for five years in the same manner as other charitable carryovers.

Mortgage Forbearance The CARES Act directs lenders holding Federally backed mortgage loans to suspend borrowers’ payments for up to 180 days and another 180 days on request without adding any additional fees, penalties, or additional interest for borrowers experiencing financial hardship due to the Coronavirus pandemic.  Landlords receiving protection during the forbearance period may neither evict nor charge a tenant any late fees, penalties, or other charges as a result of late payment for rent. To request a forbearance, contact your mortgage servicer. Read more about mortgage forbearance here.

Money Market Funds – Treasury Guarantees and Federal Reserve Backstops The CARES Act temporarily suspends certain restrictions on loan guarantees from the Treasury’s Exchange Stabilization Fund through December 31, 2020. Such action will provide a backstop for money market funds while providing time for the Treasury to establish the Money Market Funds Guaranty Program. The guarantee amount is limited to the shareholder’s account as of the close of business on the day before the announcement and is scheduled to terminate on December 31, 2020.

Student Loans For borrowers with federal student loans owned by the U.S. Department of Education, the interest rates are 0% from March 13, 2020 through September 30, 2020. This means during this time, interest will not accrue for those eligible student loans, and 100% of payments will be applied towards the principal. Further, payments for such loans will be automatically deferred until September 30, 2020. The deferral period will not adversely impact Borrowers participating in certain loan forgiveness programs. Contact your loan servicer online or via phone. If you do not know who your servicer is or how to contact them, visit or call 1-800-4-FED-AID for assistance. Read the Federal Student Aid information for Coronavirus and Forbearance here.

PLANNING TIP: Even if certain student loan payments are suspended under the CARES Act, payments made are applied 100% to principal, which is wise if you can afford to do so.

There are many additional planning opportunities that we can assist you with, so please feel free to call your Beacon Pointe advisor should you need any help or have additional questions.

Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

© Beacon Pointe Advisors. All Rights Reserved.


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