Here are the key types of financial assistance available to individuals under the CARES Act:

Economic impact “rebate” payments

Depending on income, individuals may have already received direct “rebate” payments of up to $1,200 (up to $2,400 for married couples) from the federal government. In general, single adults making $75,000 per year or less, or married couples making $150,000 or less, are eligible. Individuals could be eligible for an additional $500 per qualifying child.  The benefit amount is reduced for incomes above those amounts and is phased out completely for single filers with incomes exceeding $99,000 and $198,000 for joint filers with no children.  The IRS determines eligibility based on either your 2019 tax return or your 2019 social security statement, and the amount will be treated as a tax credit against your 2020 filing. 

Unemployment assistance

The CARES Act also provides various forms of unemployment assistance, including to people who may not qualify for these benefits under traditional eligibility rules, such as independent contractors. Further, people can also qualify if they have been diagnosed with COVID-19, or act as a caregiver to someone with COVID-19. Individuals are advised to contact their state’s unemployment insurance office for further information.

Suspension of required minimum distributions (RMDs)

The CARES Act waives RMDs (the minimum amount one must withdraw from their retirement account each year) for retirement contribution plans like 401(k)s, 403(b)s, and IRAs for 2020. If 2019 was the first year you had to take an RMD, and you didn’t take that RMD by April 1, 2020, you can skip both 2019 and 2020.

This is important because retirement contributions are tax deferred. As of last year, account holders had to begin taking minimum withdrawals from their retirement accounts by a certain age (if they turned 70 ½ by the end of 2019, otherwise by age 72). The added flexibility of not having to withdraw, plus the added time it will give retirement accounts to recover, can be financially beneficial.

You should consult with your financial and accounting professionals to determine if you would benefit from this provision. If it turns out you would benefit, and you don’t want to receive a distribution in 2020, check with your plan administrator or IRA custodian, especially if your account is set up to withdraw automatically.

Tax relief on COVID-19 withdrawals from your retirement plan

If you choose to withdraw money from your retirement plan early due to financial issues related to coronavirus, you may be entitled to some tax relief. For “coronavirus-related distributions” up to $100,000, the CARES Act waives the 10 percent early distribution penalty, and the distribution you take would not be subject to the normal 20 percent withholding upfront. The distribution will also be taxable over three years and you would be allowed to recontribute the money within three years.

You would, however, have to meet some criteria. Here are some scenarios where these tax advantages in the CARES Act would apply:

  • You are diagnosed with COVID-19.
  • You have a spouse or dependent diagnosed with COVID-19.
  • You experienced adverse financial consequences of being laid off due to COVID-19.
  • You can’t work due to lack of childcare as a result of COVID-19.
  • You had to reduce hours or close your own business due to COVID-19.

However, qualifying criteria is “subject to other factors as determined by the treasury,” so it is important to always consult with your financial and accounting professionals before considering an early withdrawal from your retirement account.

Federal student loan relief

If you have federal student loans, the CARES Act suspends student loan principal and interest through September 30, 2020.

This provision, however, does not apply to privately held student loans. You should consult with your financial professional about this relief program and if you would benefit – especially if you are nearing the end of an income-based repayment plan.

Employers may also choose to provide a student loan repayment benefit to employees on a tax-free basis under the construct of an educational assistance program until the end of 2020.  Generally, employers are already allowed to contribute up to $5,250 tax-free annually toward some employee education expenses. Until the end of 2020, this assistance can also be used to pay down an employee’s student loan. This amount would be excluded from the employee’s income. Check with your employer to see if they offer this benefit.

How to find out if you qualify

If you have questions about these or any other COVID-19 legislative provisions that might apply to your individual situation, consult with your legal, financial and accounting professionals as appropriate.

For more information, please visit our COVID-19 resource center at


Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment, or medical advice. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.

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