Call Our Office
(559) 384-2900 | Fresno
(619) 480-1413 | San Diego
(619) 480-1413 | San Diego
Your Money
Your Life
Your Way
You are now leaving the Strong Valley Wealth & Pension, LLC ("Strong Valley") website. By clicking on the "Schwab Alliance Access" link below you will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with Strong Valley or any advisor(s) whose name(s) appears on this Website. Strong Valley is/are independently owned and operated. Schwab neither endorses nor recommends Strong Valley. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with Strong Valley under which Schwab provides Strong Valley with services related to your account. Schwab does not review the Strong Valley website(s), and makes no representation regarding the content of the Website(s). The information contained in the Strong Valley website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
The CARES Act will directly or indirectly affect nearly every American. Below we provide some additional insights into a few key aspects of the bill likely to impact most individuals, families, and retirees.
Who is affected by the CARES Act?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, or the "CARES Act," provides relief to individuals, families, small businesses, and major employers. The bill also puts measures into place designed to help the healthcare industry, as well as other sectors affected by the outbreak of the virus. With such an expansive bill, it will likely change (hopefully positively) every American, either directly or indirectly.
How does the CARES Act of 2020 compare to the American Recovery and Reinvestment Act of 2009?
The cost of the CARES Act is estimated at roughly two trillion dollars, making it one of the most extensive stimulus packages in history. By comparison, the American Recovery and Reinvestment Act of 2009was estimated at $831 Billion. The following March 26, 2020, Los Angeles Times article on the topic by Sandhya Kambhampati provides some additional comparisons and breakdown of the deals, which you can view here.
What do Strong Valley clients need to know?
Waiver of Minimum Distribution Rules
An exemption may exist during the calendar year 2020 for many, who would typically be required to take minimum distributions from their retirement plans and accounts. We encourage our clients to discuss with their Strong Valley advisor, waiver qualifications, and whether this is something of which they should take advantage, within the context of an overall strategy and situation.
Increased Allowances for Charitable Donations
A part of the CARES Act stimulus is designed to encourage giving to charitable organizations during 2020. Significant economic downturns may lead to decreased donations to non-profits, as churches, food pantries, and other organizations become more heavily relied upon. For those who itemize their deductions, there is no longer a 50% individual limit based on adjusted gross income. For those who do not itemize, cash contributions of up to $300 may be deducted. And, for corporations, charitable giving limitations increased from 10-percent to 25 percent of taxable income.
Waiver of 10% Early Withdrawal Penalty
After January 1, 2020, withdrawals of up to $100,000 from qualified retirement accounts may be eligible for a waiver of the standard early withdrawal penalty. While withdrawals would still be considered income, the taxes on the distribution can be spread out over three years. Funds can also be redeposited to the account (re-contributed) any time within three years from the date of distribution, without the worry of the typical annual contribution cap limits.
According to the provision in the bill (now Section 2103), a "coronavirus-related distribution" applies, as one would expect, to any individual (or their spouse) who is diagnosed with COVID-19 "or to" those who "experience financial consequences" related to the virus (i.e., layoffs, reduction of hours, the inability to work, etc.).
Where can I obtain more details?
Summary from the Senate Committee on Finance
Strong Valley has provided a more detailed overview directly from the Senate Committee on Finance, which can be found here. (Please note that some of the section numbers may have changed since the bill was passed and signed.)
Complete Senate Bill S.3548
The full text of the Senate bill, including amendments, can be found online at this link from Congress.gov.
Your Strong Valley Advisor
Strong Valley advisors are contacting clients as needed, but if you have any questions or concerns about how the CARES Act may affect your situation, please reach out directly to your advisor or call our main office at 559-384-2900.
Quick Links
Original Full Summary from the Senate Committee on Finance
Los Angeles Times Article comparing the CARES Act vs. the 2009 Stimulus package
https://www.latimes.com/politics/story/2020-03-26/coronavirus-stimulus-package-versus-recovery-act
The Senate Bill Text
https://www.congress.gov/bill/116th-congress/senate-bill/3548/text
