CARES Act: here are some notable highlights

The ongoing COVID-19 pandemic has upended world economies and sent many industries deep into the red. In light of this, the United States government has enacted a plan to stimulate the economy and offset the financial strain many Americans are feeling as the outbreak continues. Read on for a summary of the CARES Act and its effects.

Cash Payments and Assistance

The CARES Act will send funds directly to Americans by means of stimulus checks. If you have already filed your income tax return and the IRS has your direct deposit information, you should see your stimulus check hit your bank account within the next few weeks.

  • For people with Adjusted Gross Income of up to $75,000 ($150,000 filing jointly), you are eligible to receive a $1,200 ($2,400) stimulus check
  • Parents also receive an additional $500 for each dependent child under the age of 16
  • The amount received decreases by $5 for every $100 over the income limit
    • Fully phased out with incomes over $99,000 (individual) or $198,000 (filing jointly)

Tax Filing

Another major aspect of the CARES Act includes a tax filing and payment extension. The typical due date of April 15 for filing and paying your taxes has been pushed back until July 15. Your

Retirement Account Updates

The CARES Act also anticipates that many people may feel compelled to dip into their retirement savings to supplement income lost from not working. If this situation applies to you, below are some notable updates:

  • Eliminates the early 10% withdrawal penalty
    • Waived penalties only apply to those who have tested positive for COVID-19 or experienced financial consequences (as a result of quarantines, being unable to go to work, lost your job, or were furloughed)
    • Applies to distributions of up to $100,000
    • The income tax due on distributions can be spread evenly over three years
  • Temporary waives required minimum distributions (RMDs)
    • Applies to IRAs and other retirement plans for 2020
    • A 60-day IRA rollover contribution now allows an account owner to deposit any eligible rollover distribution into an IRA as long as you do so with 60 days of distribution date
  • Increases the 401(k) loan limit from $50,000 to $100,000 for 2020

COVID-19 has impacted the average person to an unprecedented degree, and it has also disrupted major corporations in unexpected ways. The CARES Act stimulus package also provides a tidy bailout for large corporations to the tune of $500 billion. This half-trillion dollar piece of the stimulus package aims to offset the dramatically reduced business many corporations are experiencing as a result of the pandemic.

Some of the distributions for the $500 billion corporate stimulus package include $50 billion for passenger airline carriers grounded due to the current travel restrictions and another $8 billion for cargo airlines. The large corporation stimulus package also offers $17 billion in relief to corporations deemed necessary for maintaining national security. Tucked away in this section of the CARES Act are guidelines for business loans for companies of all sizes, many of them geared toward encouraging companies to maintain their payroll by incentivizing them with full forgiveness on any loans taken out to keep writing paychecks to employees.


If you have any specific questions about the CARES Act or need clarification about how it will affect your financial situation, work with your advisor to clear up the details and prepare your finances accordingly.