Cares Act Transcripts
Transcript: Rick Waechter
The Paycheck Protection Program: What you need to know to determine if it is right for your business
This is Rick Waechter, a Certified Financial Planner Professional and the founder of Old Peak Finance. Old Peak provides comprehensive financial planning for busy professionals and business owners. In this brief video I'll describe the key provision in the $2 trillion CARES Act for small business owners.
It's called the Paycheck Protection Program and it provides loans of up to $10 million for businesses that have been impacted by the current crisis and if the borrower meets certain requirements, the loan is entirely forgiven.
Those requirements are essentially twofold:
1. First, at least 75% of the loan must be used for payroll and
2. Second, headcount must be maintained at February 15 levels, with no one suffering a pay cut of more than 25%.
Another certification that a borrower must make, let me read to you Treasury's language:
“Current economic uncertainty makes the loan necessary to support your ongoing operations”.
The loans are generally available for companies with 500 employees or less, and that includes sole proprietors and gig economy workers.
Up to 25 percent of the loan amount can be used for non- payroll costs items, such as:
- Rent
- Mortgage interest
- And Utilities.
I mentioned before a $10-million cap on the loan amount. A borrower can access up to two and a half times monthly payroll, and in that calculation, you have to cap an individual's employee compensation at $100,000.
The loan program went live on April the 3rd and not surprisingly, there's tremendous demand. So while the application deadline is June 30 we'd suggest that you get your application in as soon as possible.
It's our understanding, that most major banks are accepting these applications, but only from existing banking relationships, so your first call should be to your existing business banker.
If you have questions, please reach out. You can find us at oldpeakfinance.com
An video of this transcript can be found here.
Transcript: Molly Stanifer
The CARES Act: What You Need to Know About RMDs and Recovery Rebates
Hi, I'm Molly Stanifer, Financial Advisor at Old Peak Finance, as part of the recently passed Cares Act we'd like to briefly review a couple parts which may have an impact to you changes made to the Required Minimum Distributions (or RMDs) and the Recovery Rebates.
If you're 72 or older this year, you do not need to take your RMD in 2020. As a reminder, the entire amount of your RMD is ordinary income. So if you have the funds outside of your IRA to support your living expenses, it may make sense to defer your RMD this year. This also includes inherited IRAs.
Another part of the Cares Act includes Recovery Rebates. There is a $ 1,200 eligible rebate for single filers and $ 2,400 eligible rebate for married files. Your rebate increases by $500 for each child you claim on your return. Whether you receive the full rebate, partial or none at all, is based on your income, your AGI of your most recently filed tax return in either 2018 or 2019.
The income phase-out begins at $ 75,000 for single filers and $ 150,000 for married filers.
Please let us know if we can answer questions more specific to you or visit oldpeakfinance.com
An video of this transcript can be found here.
Transcript: Katie Villegas
The CARES Act: What You Need to Know About the Impact on Charitable Giving
Hi, I'm Katie Villegas, a Certified Financial Planner Professional with Old Peak Finance. Old Peak provides comprehensive financial planning for busy professionals and business owners.
In this brief video, I'm going to talk about some charitable giving changes from the recent stimulus package.
The first major change is that this creates a $300 above-the-line deduction for charitable contributions starting in 2020. Now you must be a filer taking the standard deduction; contributions must be made in cash; and gifts cannot be used to fund donor advised funds.
Now, while this won't create a huge tax savings, but since 90 percent of taxpayers now use the standard deduction, many people can take advantage of this change.
The second major change is that the adjusted gross income limit for cash charitable contributions has been temporarily repealed. So before this new Act, you are able to deduct cash contributions only up to 60% of your AGI, and this act increases this to a 100%. And if you have contributions that exceed this amount, the excess can be carried forward for up to five years.
Now, for those of you who have donor advised funds, we have a tip for you, during this downturn in the markets. Most of you will have a mix of investments in your DAF or donor advised fund, a couple stock funds, maybe a bond fund, money market and at Schwab where our clients typically have their DAFs. when you make a donation, the default is to sell from all of your funds pro-rata, but you can actually choose which funds to sell from. So we urge you to consider selling bonds or a money market fund and conserve your stock for the eventual market rebound. And in the future we can help you rebalance to continue to have an appropriate mix for your giving time horizon.
So thank you for listening. If you have questions, please reach out and you can find us online at oldpeakfinance.com
An video of this transcript can be found here.
Transcript: Dan Routh
Are Your Student Loans Eligible for Relief Under the CARES Act?
Hi, my name is Dan Routh. I'm a Certified Financial Planner Professional with Old Peak Finance. Old Peak provides comprehensive financial planning to busy professionals and business owners.
In this brief video, I'm going to describe the changes to federal student loans under the recently passed Cares Act. On March 27th, Congress passed CARES Act, a $2 trillion stimulus package meant to curb the effects of the coronavirus on the economy.
One of the key aspects of the law was temporary relief to federal student loan payers in the form of zero percent interest rates and automatic forbearance, or better known as payment relief, for the next six months.
These changes go into effect as of March 13th through September 30th and will be automatic, meaning you do not have to contact your federal loan servicer to have these changes made to your account.
This guidance is different from what was initially announced by the Department of Education.
So it may take time for your loan servicer to catch up. By visiting their websites, your servicer will likely have a notice posted about the changes and that they're working as quickly as possible to update the site.
One really important point that we've already had some questions on, is regarding loan forgiveness, especially those going for Public Service Loan Forgiveness or PSLF. As a quick reminder, to qualify for public service loan forgiveness, you must be on an income-driven repayment plan, work for a government agency or nonprofit, and make 120 qualifying monthly payments towards your loans or 10 years worth of payments.
The key point with a relief package is that the six month of suspended payments will count as qualifying payments towards loan forgiveness, so the forbearance or suspended payments paired with zero percent interest rates. There is no incentive to continue paying toward your student loans during this period if you are working towards federal loan forgiveness.
For private loans, each company is handling the coronavirus effects differently. So if your job or your income has been impacted, you should contact them directly to see what options you have before you stop paying.
For more information about student loans and how we advise our clients on this subject, please feel free to reach out or visit us at oldpeakfinance.com
A video of this transcript can be found here.