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8935 N. Meridian Street
Suite 113
Indianapolis, IN 46260


Barnes Financial Services

(317) 663-8452


2020 CARES Act Overview

Overview of the 2020 CARES ACT

 March 25, 2020 the Senate voted unanimously, 96-0, in favor of the third bipartisan bill responding to the COVID-19


 Key Components of CARES Act 

  • The key components of the CARES Act include:
    • RMDs in 2020 can be rolled back;
    • RMDs waived for 2020;
    • Unlimited deduction for charitable planning (renewed in 2021);
    • Exceptions to 10% penalty up to $100,000;
    • PPP loan
    • EIDL advance and loan

 RMDs Waived in 2020

  • Allowed taxpayers who had already taken their 2020 RMDs earlier to roll the funds back into their qualified account penalty free within 60
  • Rollover does not count toward the otherwise applicable “once-per-year” rule or the restriction on rollovers for inherited
  • Extended through August 31,


 Exception to 10% Penalty Before Age 59 ½ 

  • Up to $100,000 per “qualified
  • Qualified” for Coronavirus Related Distribution (or “CRD”) includes:
    • Individual(s), spouse(s), or dependent(s) diagnosed with SARS-CoV-2 or COVID-19;
    • Experienced financial hardship due to COVID-19 that includes:
      • quarantined, furloughed, or laid off;
    • Withdrawal still taxable but can be spread over a 3-year period or may be put back tax-free within 3-year period (will have to amend tax return).
    • Includes traditional IRA and employer-sponsored retirement plans such as a 401(k), 403(b), or other types of defined contribution
    • Does not apply to non-qualified
  • $100,000 is collectively and not individually from each retirement
  • CARES Act eliminated the 20% automatic withholding used as an advance payment on the taxes that may be
  • Adjust appropriately for tax due on withdraw


Age 55 Exception 

  • Withdrawal still taxable but can be spread over a 3-year
  • Withdrawal can be put back within 3-year period (will have to amend tax return).
  • Claim the exception on IRS Form
  • Does not apply to IRA, SEP, and SIMPLE



Payroll Protection Program Loan 

  • Payroll Protection Program Loan (or “PPP”) allows small businesses with 500 or fewer employees, including independent contractors, sole proprietors, and self-employed individuals to obtain a loan to cover certain payroll
  • Deadline to apply for these funds was extended until August 8,