The CARES Act and Caring for Others in a Time of Crisis
o provide much-needed relief from the eects of the COVID-19 pandemic, the
President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act
into law. While the Act primarily provides economic stimulus for businesses, there are
several temporary measures that impact planning and giving.
Easing the Financial Burden
Several measures in the CARES Act are designed to help ease the ﬁnancial burden
Required minimum distributions suspended
The required minimum distribution (RMD) rules are waived for 2020 for certain
deﬁned contribution plans and IRAs—both for 2020 RMDs and for 2019 RMDs that
needed to be taken by April 1, 2020. Those who already took their RMD early in 2020
may be able to return that withdrawal to the IRA or other qualiﬁed retirement plan
from which it was taken.
IRA contribution deadline extended
The deadline for making an IRA contribution that counts for 2019 (usually April 15) has
been extended to July 15, 2020, to match the extended tax ﬁling deadline.
Penalty on early retirement distributions removed
An individual who needs to take a distribution from a qualiﬁed retirement account
for speciﬁed reasons related to COVID-19 may do so without paying the 10% early
withdrawal penalty. This applies to distributions up to $100,000 made at any time
during 2020. This distribution is taxable over three years and may also be paid back
within three years without regard to the cap on contributions.
In addition, for distributions or loans related to COVID-19:
• The 20% mandatory income tax withholding on rollover distributions is waived
• The maximum loan amount is doubled for loans between March 27 and
December 31, 2020, with the loan due date extended for one year.
Recovery payments for individuals are being processed
For many U.S. taxpayers, the Federal government will make direct payment up to
$1,200 each for individual taxpayers and $2,400 for married-ﬁling-jointly taxpayers,
with additional payments of $500 per child under age 17. Taxpayers will see
reductions as adjusted gross income (AGI) climbs above $75,000 (individual) or
$150,000 (married ﬁling jointly), with the rebate dropping to zero once AGI exceeds
$99,000 (individual) or $198,000 (married ﬁling jointly).