Awareness on COVID-19 Relief Packages

Awareness on COVID-19 Relief Packages

The US Congress has been working at a record pace over the past few weeks to deliver an unprecedented level of financial relief to Americans being impacted by the COVID-19 crisis, which for all practical purposes, is all of us in Northwest Indiana.  

There have been three large relief packages signed into law by the President and financial professionals have now had enough time to go start going through the laws to see how they can be applied.  These are huge pieces of legislation and many of the components are “automatic” and require no action on behalf of the benefit recipient.    I would like to go through a few that do require awareness and action by those who may choose to access these COVID-19 related programs. Let’s talk about how to get started.

First, on the small business side, the programs are designed to help employers retain employees.  The Paycheck Protection Program (PPP) part of the law is an expansion of a type of loan offered through the Small Business Association (SBA) called the 7a loan.  

 Under the PPP most employers with less than 500 employees (profit and non-profit) can apply for a loan equal to 250% of average monthly payroll expenses over the prior 12 months.   The loan is repayable over 10 years at an interest rate of 4%, but if certain employee retention stipulations are met, the loan may actually become forgivable and not have to be paid back at all.    

Very important, the 7a loan is processed through local banks enrolled in the program.   7a program banks that I am aware of locally are First Merchants, Centier, 1st Source, and most large national banks.  Employers wanting to access this program need to contact their bank to begin the process.    A broader list is at  Any small business resolved to retain employees through the shelter at home order should educate themselves on this program.

 Also, on the small business side is the SBA Economic Injury Program.  This program is an expansion of the SBA disaster relief program and available for most self-employed individuals and small businesses having experienced, or expect to experience, a loss of revenue due to the COVID-19 “disaster”.    Due to our state’s shelter at home order, Indiana is considered a COVID-19 disaster zone.  This program provides an emergency cash advance grant of up to $10,000.   If you receive a 1099 tax form, file a Schedule C, or other small business tax form you are likely eligible for this program.  Also very important, local banks are not involved with this process and the grant can be applied for directly with the SBA online at   

A little less urgent but still requiring deliberate decision making on behalf of small businesses is the Employee Retention Credit which could provide a refundable tax credit of up to $10,000 against future payroll taxes.  This one is a bit more complicated and I suggest employers consult their payroll or tax professionals for more guidance, but refundable credits are clearly the most attractive type of tax benefit.

On the individual side, there are a couple of planning tools to be aware of. 

First, for those over the age of 70 ½ in 2019 or 72 in 2020, Required Minimum Distributions from retirement plans (RMD) are waived for 2020.  This also includes those who have a Beneficiary IRA subject to RMD.  This can enable the account owner to not have to sell assets in their IRAs during 2020 while the investments may be a depressed value.

In addition, retirement savers under age 59 ½ can access their retirement plans for up to a $100,000 coronavirus related distribution without tax penalty in 2020.  Furthermore, the taxes on the withdrawal can be paid over the next three years and the withdrawal amount can be re-contributed over the next three years as well.   I professionally can envision all kinds of planning techniques employing this new rule.

Last but not least, the new laws also provide a $300 above line tax deduction for charitable contributions in 2020.  This means even those taxpayers who do not itemize deductions can get a tax benefit for charitable donations this year.  Our amazing local non-profits are doing great work during this crisis, and they need the money.  Please be generous and utilize this incentive.

Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at Securities offered through LPL Financial, member FINRA