Coronavirus Stimulus Package

Originally published March 26, 2020

U.S. Senate Unanimously passed (96-0) before midnight on Wednesday, 3/25/20
U.S. House of Representatives expected to vote Friday morning, 3/27/20
U.S. President expected to sign off on authorization immediately after U.S. House approves

At $2 trillion, the U.S. government’s Coronavirus Stimulus Package in response to the COVID-19 pandemic is the largest economic stimulus in American history. Prior to this, the largest economic recovery package was less than half this size, $831 billion during the 2008 Financial Crisis. To provide additional context of this bipartisan deal’s massive size, it represents over half of the tax revenue the federal government expects to collect for the entire year ($3.5 trillion).

The legislation was designed to send essential relief to workers, businesses, and hospitals devastated by the pandemic and the economic disruption it has caused. Headlines of the legislation are direct payments to taxpayers, loans to small businesses, and the creation of a $500 billion corporate bailout fund, amongst other components designed to provide a jolt to the U.S. economy.

We will continue to update this post as new information becomes available and the plan moves through the legislative process. The legislation as we currently understand it:

Direct Payments to Taxpayers

$250 billion in direct financial payments to taxpayers
Anticipated timeframe to receive:
- Treasury Secretary Steve Mnuchin previously said “as soon as Congress passes…three weeks” which would be mid-April
- However, the last time the federal government sent checks to Americans was in 2008, when it took approximately 2 months for individuals to receive their checks
- Others have suggested a seemingly arbitrary date of April 6th
- Actual Reality: TBD
How stimulus dollars will be received:
- If the IRS has your bank account information (from previous tax filings), transferred via direct deposit
- If no bank account information on file, physical check mailed
Likely to be based on 2019 Adjusted Gross Income (AGI) (if already filed) or 2018 Adjusted Gross Income (AGI) (if have not yet filed 2019 tax return)
- $1,200 to individuals with incomes up to $75,000 per year, phasing out entirely for those earning more than $99,000
- $2,400 to married couples earning up to $150,000, phasing out entirely at $198,000
- Families receive an additional $500 per child

Retirement Account Benefits

401(k) loan limits raised
IRAs
- Hardship distribution rules loosened: access to up to $100,000 of retirement savings without the 10% penalty that normally applies to withdrawals prior to age 59 1/2; however, portion of withdrawal may still be taxable (only penalty waived)
- 2020 Required Minimum Distribution (RMD) suspended to avoid forcing retirees to withdraw money during market downturn, based on near record-high 12/31/19 account values (Congress enacted similar measure in 2009)

Unemployment Benefits

Unprecedented jobless benefits to include furloughed employees and self-employed workers (including contractors, freelancers, and gig workers (i.e. Uber/Lyft drivers), who typically aren’t eligible
Jobless insurance extended by 13 weeks
Increase current state-provided unemployment assistance by $600/week for 4 months
- Average weekly state unemployment benefit is ~$400, so this will more than double recipients’ benefit temporarily

Small Businesses

$350 billion of new, federally-guaranteed loans issued by community banks via the Small Business Administration
- Available until June 30, 2020
- Loan amount will be forgiven if the employer does not lay off their workers and continues to pay them
$17 billion earmarked to relieve small firms of having to pay back existing loans for 6 months

Distressed Company Bailouts

$500 billion total
- $425 billion discretionary fund controlled by the Federal Reserve
- $50-$75 billion for industry-specific loans (i.e. airlines and hotels)
- $17 billion of which is earmarked for companies deemed to be crucial to national security
  - Discretionary as no specific companies are named, but examples of which might include Boeing and General Electric Co.
Immediate disclosure of recipients
- Businesses controlled by senior government officials are ineligible
  - i.e. POTUS, VP, members of Congress, and heads of executive departments
Federally monitored (inspector general and oversight board)
- While company receiving government assistance and for 1-year after, no stock buybacks

Hospitals and Health System Assistance

$130-$150 billion to stabilize the finances of the health care system and to provide personal and protective equipment, testing supplies, and new construction to house and treat patients
Medicare payment increases

State and Local Government Assistance

$150 billion to provide liquidity to aid in response to combat coronavirus

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