Financial Planning for Coronavirus Stimulus Package

On March 27, 2020, the $2 trillion economic recovery package was signed into law.

Direct Payments

The big headline is that the law provides for direct payments of up to $1,200 for most individuals and $2,400 for most married couples filing jointly with an extra $500 for each qualifying child under age 17. Payments could start in as soon as three weeks.

Single adults with an adjusted gross income of $75,000 or less are eligible for up to $1,200. If you’re married and filing jointly with an adjusted gross income of less than $150,000 are eligible for $2,400.

Payments start to phase out above those income levels.


The relief package expands unemployment insurance benefits.

If you’ve lost your job because of the outbreak, you will seek your weekly state insurance benefits – which average about $400 – increased by $600 for four months.

And if you are still unemployed after state benefits end, you could get an additional 13 weeks of help.

Required Minimum Distribution (RMD)

RMDs waived for 2020 (so probably want to increase Roth conversions to use the lower bracket not being used by distributions)

  • This apparently includes anyone who deferred their first RMD from 2019 (the April 1 deadline).
  • Includes inherited IRA RMDs

Tax Deadline

Tax return deadline delayed from 4/15 to 7/15

  • Including payments due for that return
  • Including prior year retirement plan and HSA contributions
  • Not all states though (check here)
  • 4/15 estimated payments delayed until 7/15
  • 6/15 quarterly payments are due on 6/15

Charitable Contributions

Charitable changes:

  • Above-the-line deduction for up to $300 of charitable gifts (this is a permanent change)
  • 50% AGI limit on cash charitable contributions suspended for 2020 (corporate 10% limit increased to 25%)


Homeowners with federally-backed mortgages are protected from foreclosures for as long as 180 days.

Loans from Retirement Plans

Loans/withdrawals from retirement plans:

  • 10% early withdrawal penalty waived on withdrawals up to $100,000 for “corona-related purposes.”*
  • Income attributable to such distributions would be subject to tax over three years
  • Funds may also be recontributed within three years (not sure how that will interact with the previous point) “without regard to that year’s cap on contributions.”

Payroll Tax

Payroll taxes:

  • Refundable payroll tax credit for 50 percent of wages paid by employers to employees, if 1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or 2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.
  • For eligible employers with 100 or fewer full-time employees whether the employer is open for business or subject to a shut-down order is irrelevant.
  • The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
  • Employers and self-employed individuals can defer payment of the employer share of the Social Security tax (6.2%).  Half to be repaid by 12/31/21 and the other half by 12/31/22.

Net Operating Loss (NOL)

NOLs from a tax year beginning in 2018, 2019, or 2020 can be carried back five years, taxable income limitation temporarily removed as well.  (the Tax Cuts and Jobs Act of 2017 removed NOL carrybacks.)

Student Loans

  • Interest on all federal student loans is waived through Sept. 30th
  • Borrowers may skip payments through Sept. 30th. Info circulating last week was that borrowers could be granted an emergency 60-day forbearance upon request that would be automatically applied after 31 days of delinquency, but it seems this has been updated to 6 months.
  • Skipped payments will still qualify for PSLF
  • Collection of federal student loan debt is suspended
  • Given the above, clients may want to reconsider refinancing their federal student loans until the 0% interest benefit has expired.
  • If you are a student receiving a Pell grant who has to drop out because of coronavirus, you won’t be penalized.
  • Employers can contribute up to $5,250 annually toward an employee’s student loans and it is not included in the employee’s income (2020 only – for now, otherwise why specify “annually”).



*”A coronavirus-related distribution is a one made to an individual: (1) who is diagnosed with COVID-19, (2) whose spouse or dependent is diagnosed with COVID-19, or (3) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.”

Please contact AIO Financial if you have any questions.

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