Many of us have been experiencing some anxiety lately amidst the COVID-19 crisis. A completely normal reaction to uncertainty is fear, because our brains are hard-wired in specific ways. However, our automatic reactions to stress do not have to drive our actions. There are many unknowns in our world currently. Yes, our lives are changing, but there is still hope. Truly, we are all in this together.
More Help is on the Way
Today (4/24/2020) President Trump signed legislation to provide $484 billion to replenish the Small Business Association (SBA) lending program and support hospitals and COVID-19 testing. This includes an additional $310 billion in funding for the Paycheck Protection Program (PPP), with $60 billion reserved for community banks and small lenders. In addition, $75 billion is for hospitals, $25 billion for testing efforts, and $60 billion for emergency disaster loans and grants.
Are you an owner and need help with the Paycheck Protection Program?
Over the past 3 weeks, our trusted affiliates Farmers State Bank (FSB) processed $83 million in PPP loans. With Round 2 of funding awaiting final approval, the FSB lending team stands ready to help. Are you a business owner and curious if you qualify or are you in need of assistance? If so, please call FSB's small business lending team at 319-874-4509.
A Refresher of the CARES Act
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. Here is refresher of highlights from some key provisions of this act.
- 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
- 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 where a 2019 return hasn't been filed) and sent automatically via check or direct deposit. 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 decreases by $5 for every $100 in income over the threshold.
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 2020.
- The 10% early-distribution penalty tax that would normally apply to distributions made prior to age 59½ (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 provided.
- 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.
- 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.
- 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.
Do you have questions? Are you wondering if your finances are still on track? Are you feeling anxious about anything? Please feel free to reach out to our team at 319-235-6561. We are happy to help in any way we can!
As we move through spring and into summer, how about we all pause and enjoy the little moments we find each day? Breath the sweet scent of flowers and freshly cut grass, listen to the birds sing and wind through the trees, watch the sun as it still rises and sets each day. Life spins on, and so will we. Stay healthy and take care.
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