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April 7th and 8th, 2020
COVID-19 News & Updates
As you know, the Coronavirus is having an impact on business and society. Our thoughts and prayers are with all those impacted by the situation. We will be providing daily and weekly updates about COVID-19 to you. We hope that you find these interesting and informative.

Treasury preparing to seek more than $200 billion to replenish small business coronavirus program

Development comes amid surging demand for small business loans under coronavirus rescue bill

Treasury Department officials are preparing to ask Congress to swiftly commit another $200 billion to replenish a new small business  coronavirus  program that’s being overwhelmed by surging demand, according to two people briefed on the pending announcement.

The pending request is being designed to backstop a $349 billion small business loan program was created as part of the $2 trillion coronavirus rescue bill enacted late last month. Banks and the Small Business Administration have been overwhelmed by applications since the program began operating on Friday, leading President Trump, Sen. Marco Rubio (R-Fla.) -- who authored the program -- and others to predict the need for more funds.

That Treasury would make the request on Day Three of the program’s existence underscores the surging demand for businesses to obtain financing as many of them struggle to avoid closing. The small business program has ramped up more quickly than other elements of the rescue bill -- including unemployment insurance and payments to individual -- but demand has still outstripped expectations.

We will keep you up to date on the status of this evolving situation.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act
How does this affect your retirement plan?
  • Coronavirus-related distributions of up to $100,000 may be allowed in 2020 without penalty
  • If loans are allowed, loan amounts may be increased
  • Required Minimum Distributions (RMDs) are waived for 2020
 


The CARES Act: How does this affect you and your IRA?

This summary is not individual tax advice. Please seek professional tax advice before affecting transactions.

No. 1 - Distributions from IRAs and qualified plans up to $100,000 .

Provisions:
  • Must be impacted by coronavirus due to own diagnosis, diagnosis of spouse or dependent, experience adverse financial consequences (quarantine, laid off, etc), unable to work due to lack of childcare, own a business that has been adversely affected or meet another the reason the IRS approves of;
  • 10% pre 59 ½ penalty is waived;
  • Qualified plans do not have to comply with 20% mandatory withholding;
  • Eligible to be repaid to plan or IRA within 3 years;
  • Income may be spread evenly over 2020, 2021 and 2022 if owner desires.

No. 2 – Required Minimum Distributions (RMDs) are waived for 2020.

Provisions:
  • Broadly applies to all IRAs and qualified retirement plans such as 401(k), 403(b) and 457(b);
  • Beneficiary IRAs are covered under this relief;
  • RMDs that have already been taken for 2020 may be returned if a rollover is made within 60 days of the distribution. A further exception applies (no 60 day limit) to those who have been impacted by the coronavirus as shown above. Beneficiary IRAs are NOT eligible for this relief.

No. 3 – 2020 is ignored for purposes of the 5-year rule

Provision:
  • Non-designated beneficiaries of qualified plans and IRAs are allowed to disregard a 2020 distribution. If 2020 was the 3rd year, for example, 2021 will now be counted as the 3rd year and the countdown toward 5 years will continue from there.

No. 4 – A $300 “above the line” deduction for Qualified Charitable Contributions is allowed for 2020 (and maybe every year forward due to bill wording.)

Provision:
  • Contribution must be made to a qualifying charity;
  • Contribution cannot be made to a donor-advised fund or a “supporting organization” under 509(a)(3); and
  • Contribution must be made in cash.

No. 5 – Though not related to IRAs or qualified plans, Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs) and Healthcare Flexible Spending Accounts (FSAs) receive relief .

Provision:
  • Over the counter medications are now qualified medical expenses as are certain feminine hygiene products.

The Hatcher Capital Investments
Clay McKinney
Questions! Email him here
Will N.Y.C. Reach the Peak of the Outbreak Soon? Here’s What We Know

It might be soon; it might be a month away. There’s reason to hope, and reason to be wary.

Gov. Andrew M. Cuomo has said in the past week that he believes the number of coronavirus cases in New York will hit its high point this week, and then hopefully begin to drop.

But even he acknowledges the uncertainty of that prediction.

“The projection models have a number of alternatives,” he said at a news conference on Monday. “Some suggest basically the curve goes up and then drops precipitously. Some suggest a slight pause at the top. Some suggest there’s a longer pause at the top, which is effectively a plateau effect, or again the straight up and straight down precipitous drop, which is the peak effect. No one can tell you which will occur.”

What are the signs that we’re reaching the peak?

There are several. In New York City, the  number of hospitalizations  has been relatively flat for more than a week. The  daily death toll has dropped in recent days  after reaching 262 deaths on March 31, according to the Department of Health. “There are signs we are hitting a plateau,” Mark Levine, who heads the City Council’s health committee,  said on Twitter  on Monday.

On behalf of all of our team, please know that we are here for you and that we will continue to do everything we can to support you during this time. Please do not hesitate to let us know if there is anything you need! 

The Hatcher Agency