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The CARES Act Summary for Retirees

March 30, 2020

Last week was another intense week in the markets. However, all eyes were on Congress and the stimulus bill. On Friday, March 27th, the historic Coronavirus Aid, Relief and Economic Security Act (the CARES Act), a $2 trillion emergency fiscal package, was passed by Congress and signed by the President.This is what we know today:

 Q: Am I getting a check?

Checks will be determined based on 2019 tax return data if you have already filed or 2018 if you have not filed 2019. The rebate is an advance refund of 2020 taxes, meaning that you might receive money now, but it will ultimately be reflected on your 2020 taxes, which are filed in 2021. Relief payment amounts are considered non-taxable credits and there is no claw-back provision for amounts that were “over-advanced.”

Q: How much will I receive?

  • $1,200 for individuals, or
  • $2,400 for joint filers

 An additional $500 credit for each child is also available.

The threshold amounts are based on a taxpayer’s 2018 “adjusted gross income” (AGI), unless the taxpayer has already filed a 2019 tax return.  The phase-out begins at:

  • Single filers, $75,000; completely phased-out for AGI over $99,000
  • Heads of households, $112,500, completely phased-out for AGI over $136,500
  • Joint filers, $150,000, completely phased-out for AGI over $198,000

Q: I am retired will I still receive the check?

The rebate is available to all United States taxpayers, even if the taxpayer has no income. It applies to individual filers, joint filers, and those who file as head of household. There must be a social security number and not be claimed as dependent by another tax payer.

Q: How does the IRS know where to send the money?

            If bank information was included on your 2018 or 2019 tax returns, then a check will be sent to the bank on record. In lieu of direct deposit, the check will be sent to your last known address on file. We suspect that this will work well for some and not so great for others.

Q: When are my taxes due this year?

            The new tax due date this year is July 15th. All procrastinators should be happy.

Q: What about my Required Minimum Distributions:

            The required distributions required as part of the 2020 tax year have been suspended.

Q: What if I have already taken my Required Minimum Distribution for this year?

            You may be able to effectively “put it back.” Due to the 60-day rollover regulation there is a way that you can write a check back into your account. However, keep in mind that we have already sent the taxes to the IRS. You will have to “settle-up” with them when it is time to file the 2020 tax return next year.

            Example: Richly Retired Reba had $500,000 in her account on December 31, 2019, and due to her age her RMD was $20,000. An amount of $15,000 goes into her bank account and $5,000 goes directly to the IRS.  She likes to take her RMD each February for her girls’ cruise in March. Well, due to the pandemic, no cruise for Reba and the girls this year, so she wants to put her RMD “back” in the account since the account value is down. She must write a check of $20,000 to put back into the account and then the IRS will owe her a $5000 credit on her tax return next year.

Q: I heard that there is a special Charity Deduction, how does that work?

            Yes, you can get an above-the-line deduction for a charitable donation of $300 dollars to a qualified charity. The amount may not be huge but after the tax law changes in 2017 most people are not itemizing, so this does allow for you to “get credit” for helping a charity during this difficult time. Plus, every dollar helps.

Q: How are businesses getting help?

            Small businesses are eligible to delay payroll taxes and are also eligible for SBA loans. Additionally, small businesses may have the ability to defer payroll taxes. If you are a small business owner with further questions, please reach out to our office for a conversation with an advisor to discuss these provisions.

Other provisions include: income increased unemployment benefits, student loan relief in the form of delayed payments, higher flexibility for retirement plan distributions prior to a distributable event and student loan relief.  This is a summary of a few of the provisions to help Americans facing economic challenges of the COVID-19 pandemic. For further information please read the bill in its entirety at and check for further guidelines from the IRS.