Under the CARES Act, unemployment insurance:
- Is authorized for up to 13 additional weeks of federally funded benefits (for a total of 39 weeks) for individuals who exhaust state and federal benefits and are able, available, and actively seeking work.
- Includes a $600 supplemental weekly benefit for all weeks of unemployment between April 5, 2020, and July 31, 2020.
- Is available to independent contractors, self-employed individuals, and workers with a limited work history.
- Contains self-certification requirements allowing workers to state that they are unable to work due to the coronavirus outbreak.
The CARES Act makes some changes to retirement plans:
- The CARES Act relaxes required minimum distributions and waives minimum distributions for eligible retirement plans in 2020.
- The 10% early withdrawal penalty that generally applies to withdrawals made by those who are younger than 59 ½ is waived on retirement account distributions related to the coronavirus, with a $100,000 distribution cap.
- Taxes associated with these distributions may be paid ratably over three years, beginning with taxable year 2020.
For more information, please consult the Internal Revenue Service (IRS).
The CARES Act also increases loan flexibility on retirement plans:
- Loan limits increase from $50,000 to $100,000.
- Loan limits increase from 50% of the vested benefit to 100% of the vested benefit.
- Loan repayments may be suspended for one year.
The CARES Act also authorizes new tax credits for businesses, including:
1. Businesses that are either forced to close due to a government order relating to COVID-19 or experience a decline in gross receipts as compared to 2019—are eligible for an employee retention tax credit. The credit is equal to 50% of the total wages of employees who are not providing services starting on March 13, 2020, through December 31, 2020, up to a maximum of $10,000 total per employee. This credit is not available to businesses who receive Paycheck Protection Program funding.
2. The employer share of Social Security taxes (6.2% of wages up to the Social Security ceiling) that accrue from March 27, 2020, through and including December 31, 2020, are deferred. 50% of 2020 Social Security taxes are due by December 31, 2021, with the remainder due by December 31, 2022. This credit does not apply to employers who receive debt forgiveness under Section 1106.
3. For single-employer plans, any minimum employer contributions that would be due during the calendar year 2020 are due January 1, 2021. Interest accrues for the period between the original due date for the contribution and the payment date.