“The CARES Act also authorizes the Treasury to create new guidance on who may qualify, so we could see a blanket statement from Treasury along the lines of ‘we have determined everybody has  been impacted by this crisis, therefore, we’ll let everybody utilize this,’” said Levine. “That hasn’t happened yet.”

Advisors should be aware of the potential benefits to their clients of the expanded withdrawals permitted by the CARES Act – the 10% penalty for distributions to account holders under age 59 and ½ are being waived for the year, said Levine, offering a one-time opportunity to remove funds efficiently from before-tax accounts. Withholding requirements on distributions are also being waived to allow account owners to spread  the income over three tax years, beginning in 2020.

So if someone took a $99,000 distribution this year that qualified as a coronavirus-related distribution, they could either take all of that income on their 2020 taxes as normal, or spread that income in equal $33,000 increments over the 2020, 2021, and 2022 tax years.

Similarly, distributions can be rolled back into retirement accounts over three years in single or multiple payments, allowing account holders to amend their tax returns and recoup any taxes paid on the income from those distributions, said Levine.

Retirement Plan Loans
The CARES Act also loosens the rules around loans from workplace retirement plans, said Levine lifting the maximum loan amount to $100,000 and eliminating the loan limits tied to the vested balance of the account. Previously, most workplace retirement accounts limited loans on smaller accounts to 50% of the vested balance. Payments on the the loans now through the end of 2020 can be delayed up to one year.

Charitable Deductions
The legislation also made two notable changes to charitable deductions, said Levine, the most important being that the limit on contributions in cash that can count against a giver’s adjusted gross income has been waived for 2020.

“A client can completely wipe out their 2020 tax bill by giving to charity,” said Levine. “The only catch is that it mus go directly to charity. They cannot go to either a 509(a)(3) supporting organization, or, more importantly, they cannot go  to donor-advised funds.”

The act also includes an above-the-line, non-itemized additional $300 charitable deduction for cash contributions, which doesn’t amount to much, said Levine, but “some clients want to pay as little as possible on taxes, and if you didn’t tell them that they could save $3, then they’re going to get  upset. It’s important.”

The Employee Retention Credit
The CARES Act also includes an employee retention credit, which offers employers a 50% credit on wages up to $10,000 per person.

“The catch is, in order to receive this, you’ve got to have a qualifying event: Either your revenue has been significantly reduced, like a quarter with less than 50% of the revenue that you had in the same quarter of 2019, or you’ve been shut down by the government, partially or completely, during that quarter,” said Levine. Firms that meet the qualifications for the credit will continue to receive  it throughout the balance of 2020, or until the quarter after their revenue exceeds 80% of the revenue reported for the same quarter of the previous year. Recipients of Paycheck Protection Program loans are ineligible for the provision.