The Act is designed to help employees, businesses, and nonprofits facing economic hardship during the coronavirus pandemic. There are a few key provisions of the CARES Act that may affect you and your charitable goals.
1. Are there new reimbursement categories for HSAs and FSAs?
Yes. Beginning on or after January 1,2020, the law allows HSAs and FSAs to reimburse individuals for the purchase of OTC medical products without a prescription from a physician, as well as menstrual care products.
2. Can an employee cancel their required minimum distributions for retirement accounts?
Yes. To help provide relief for retirees, the CARES Act allows an employee to cancel 2020 required minimum distributions (RMDs) for distributions from 401(a), 401(k), 403(a), 403(b) and governmental 457(b) retirement plans and IRAs. However, employees will still be eligible to take distributions. Click here for additional information. You may also contact TIAA at 1-800-842-2252 or login to your retirement account by selecting the single sign-on link under the Employee Self-Service tab in myBama.
3. Are retirement plan loans available to employees?
Yes, if the employee qualifies based on coronavirus-related eligibility, maximum loan limits are increased from $50,000 or 50% of vested account balances to $100,000 or all of the vested account balance made within 180 days of enactment. If an employee has existing retirement plan loan payments, they may be able to defer payments for one year. Click here for additional information. You may also contact TIAA at 1-800-842-2252 or login to your retirement account by selecting the single sign-on link under the Employee Self-Service tab in myBama.
4. What effect did the CARES Act have on tax filing and retirement contribution deadlines?
The Treasury Department has extended tax filing deadlines which also applies to IRA, HSA and MSA contribution deadlines. The deadline for filing a 2019 tax return—and any corresponding 2019 IRA, HSA and MSA contributions—has been extended to July 15, 2020. For additional information, contact TIAA at 1-800-842-2252 or login to your account by selecting the single sign-on link under the Employee Self-Service tab in myBama.
5. Will employees receive any “recovery rebate” payments from the IRS?
Yes. Qualified taxpayers will receive direct stimulus “recovery rebate” payments from the IRS of up to $1,200 for individuals or $2,400 for married couples filing a joint return, with amounts increasing by $500 for every child. These amounts begin phasing out when individuals have $75,000 in adjusted gross income or couples filing jointly earn $150,000. The direct payments are not available for individuals and couples filing jointly who have adjusted gross incomes of $99,000 and $198,000, respectively. Payments from the IRS are scheduled to begin in April 2020.
6. Which dependents qualify for the $500 recovery rebate payment?
The CARES Act uses the Child Tax Credit (CTC) eligibility standards. All qualifying children who are under age 17 who have not provided for more than half of their own expenses and lived with the taxpayer for more than six months are eligible. This means that adult dependents, such as college students aged 17 and over, and elderly dependents do not qualify for the $500 rebate. Adult dependents do not qualify for their own rebate either.
7. Does the CARES Act provide relief to student loan borrowers?
Student borrowers with Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS loans, Consolidation Loans, or Federal Family Education Loans (FFEL) will have all payments suspended without penalty through September 30, 2020. During this time, interest will not accrue on these loans. Student borrowers do have the option to make payments directly towards their principal balance during this relief period. Students may also retain Pell grants if they must leave school due to coronavirus closures.
8. Will suspending student loan payments negatively impact an employee’s eligibility for the Public Service Loan Forgiveness (PSLF) Program?
No. If an employee has applied for a loan forgiveness program (such as Public Service Loan Forgiveness) or loan rehabilitation program, the time payments are suspended will still count toward forgiveness or progress rehabilitating a loan. The U.S. Department of Education is required to notify all borrowers regarding the temporary suspension of their loan payments or collections.