Not part of a group? You may have to go it alone

You may have group health insurance or be able to buy it through your employer. Group insurance is most commonly offered through employers. It is also offered through some civic groups and other organizations (e.g., auto clubs, chambers of commerce). A single policy covers the medical expenses of a group of people. All eligible members of the group can be covered by a group policy regardless of age or physical condition. The premium for group insurance is calculated based on characteristics of the group as a whole, such as average age and degree of occupational hazard. It’s generally less expensive than individual insurance.

If you can’t join a group, consider buying individual insurance. Unlike group insurance, individual insurance is purchased directly from an insurance company or agent. When you apply, you are evaluated in terms of how much risk you present to the insurance company. Your risk potential will determine whether you qualify for insurance and how much it will cost, depending on state laws. You must pay the full premiums yourself.

If you have to go it alone, you can shop for health insurance coverage through state-based Affordable Insurance Marketplaces. You can compare health plans according to price and quality, and ultimately purchase an affordable plan that best meets your health insurance needs.

Know what’s out there

The cost and range of protection that your health insurance provides will depend on your insurance provider and the particular policy you purchase. You may have comprehensive health insurance that involves several types of coverage, or basic coverage that includes hospital, surgical, and physicians’ expenses. In addition, major medical coverage is necessary in the event of a catastrophic accident or illness. Many plans also cover prescriptions, mental health services, and other health-related activities (e.g., health-club memberships).

When it comes to health insurance, HMO, PPO, and POS are more than just letters. You need to know the types of health plans available so that you can make an informed decision. You can obtain health insurance through traditional insurers like Blue Cross/Blue Shield, health maintenance organizations (HMOs), preferred provider organizations (PPOs), point of service (POS) plans, and exclusive provider organizations (EPOs).

• Traditional insurers: These plans usually allow you flexibility regarding choice of doctors and other health-care providers. Some policies reimburse you for covered expenses, while others make payments directly to medical providers. You will pay a deductible and a percentage of each bill, known as coinsurance.
• HMOs: Health maintenance organizations cover only medical treatment provided by physicians and facilities within their networks. You must choose a primary care physician, who will either approve or deny any requests to see a specialist. You usually pay a fixed monthly fee for health-care coverage, as well as small co-payments (e.g., $10 for each office visit and prescription).
• PPOs: Preferred provider organizations do not require members to seek care from PPO physicians and hospitals, but there is usually strong financial incentive to do so (in terms of percentage of reimbursement). You usually pay a fixed monthly fee for health-care coverage, as well as small co-payments (e.g., $10 for each office visit and prescription).
• POSs: Point of service plans combine characteristics of the HMO and PPO. You must choose a primary care physician to be responsible for all of your referrals within the POS network. Although you can choose to go outside the network with this type of plan, your health care will be covered at a lower level.
• EPOs: Exclusive provider organizations are basically PPOs with one important difference: EPOs provide no coverage for non-network care.

Read your contract

You should have a basic understanding of what your policy does and does not cover. This may help you prevent an unexpected medical bill from arriving in your mailbox, because you’ll know ahead of time, for instance, whether or not liposuction is covered. You must read your policy carefully, particularly the section on limitations and exclusions. The specifics will vary from policy to policy. In general, though, most policies will at least mention the following:

• Pre-existing conditions: An illness or injury that began or occurred before you obtained coverage under the policy. The Affordable Care Act eliminated the ability of a health insurance policy or plan covering essential health conditions to deny coverage for pre-existing conditions. However, pre-existing conditions may be imposed for other than essential health benefits.
• Nonduplication of benefits: Benefits will not be paid for amounts reimbursed by other insurance companies.

Your health insurance policy should also address the following issues:

• Deductible: The amount that you must pay before insurance coverage begins (usually an annual figure
• Coinsurance: The portion of each medical bill for which you are responsible
• Co-payment: The fixed fee that you pay for each doctor visit or prescription
• Family coverage: Many group plans allow you to cover your spouse and dependents for an increased premium
• Out-of-pocket maximum: This provision is designed to limit your liability for medical expenses in the calendar year; you won’t have to make coinsurance payments in excess of this figure
• Benefit ceiling: The maximum lifetime payout under the insurance policy, usually at least $1 million

In conclusion, having health insurance is an important aspect of every person’s life and financial plan.  There are many options to choose from and being armed with some basic information can help you evaluate what is right for you and your situation.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

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Fortunately, there’s the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). COBRA can prove to be a real lifesaver for you and your family when your health coverage is jeopardized. You may also benefit from the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which took some further steps toward health-care reform.

The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) may help you continue your health insurance coverage for a time

COBRA is a federal law designed to protect employees and their dependents from losing health insurance coverage as a result of job loss or divorce. If you and your dependents are covered by an employer-sponsored health insurance plan, a provision of COBRA entitles you to continue coverage when you’d normally lose it. Most larger employers (20+ employees) are required to offer COBRA coverage.

As an employee, you’re entitled to COBRA coverage only if your employment has been terminated for any reason other than gross misconduct or if your hours have been reduced. However, your spouse and dependent children may be eligible for COBRA benefits if they’re no longer entitled to employer-sponsored benefits because of divorce, death, or certain other events.

Unfortunately, you can’t continue your health insurance coverage forever. You can continue your health insurance for 18 months under COBRA if your employment has been terminated or if your work hours have been reduced. If you’re entitled to COBRA coverage for other qualifying reasons, you can continue your coverage for 36 months.

• Divorce: If your former spouse maintained family health coverage through work (and works for a company with at least 20 employees), you may continue this group coverage for up to 36 months after the divorce or legal separation. You’ll have to pay for this coverage, though. Your cost of continuing coverage cannot exceed 102 percent of the employer’s cost for the insurance. COBRA coverage will terminate sooner than 36 months if you remarry or obtain coverage under another group health plan.
• Company goes out of business: Unfortunately, you may be out of luck here. If your company goes out of business and no longer has a group health insurance policy in force, then COBRA coverage will not be available. (A possible exception involves union employees covered by a collective bargaining agreement.)

Keep in mind that, whatever your circumstances, your employer may require individuals who elect continuation coverage to pay the full cost of the coverage, plus a 2 percent administrative fee. However, if you’re eligible for COBRA coverage and don’t have any other health insurance, you should probably accept it. Even though you’ll pay a lot more for coverage than you did as an employee, it’s probably less than you’ll pay for individual coverage. You won’t be subject to any health screenings, tests, or other pre-existing medical condition requirements when converting to a COBRA contract. Your COBRA benefits and coverage will be identical to those provided to similarly enrolled individuals.

The Health Insurance Portability and Accountability Act of 1996 expanded COBRA

In 1996, HIPAA expanded certain COBRA provisions and created other health-care rights. In many ways, HIPAA took a significant step toward health-care reform in the United States. Some of its provisions may affect you. The major provisions of HIPAA:

• Allow workers to move from one employer to another without fear of losing group health insurance
• Require health insurance companies that serve small groups (2 to 50 employees) to accept every small employer that applies for coverage
• Increase the tax deductibility of medical insurance premiums for the self-employed
• Require health insurance plans to provide inpatient coverage for a mother and newborn infant for at least 48 hours after a normal birth or 96 hours after a cesarean section

For example, assume you’re pregnant and covered by a group health insurance plan at work. You decide to take a job at another firm. Under HIPAA, pregnancy cannot be considered a pre-existing condition for a woman who’s changing jobs if she was previously covered by a group health insurance plan. So if you had insurance at your old job, you can’t be denied health insurance coverage at your new job simply because you’re pregnant.

However, many companies require you to be employed for 30 days or more before you become eligible for coverage. If you are nearing the end of your pregnancy, and that requirement poses a problem for you, you may be eligible for coverage under COBRA through your former employer.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

The post Health Insurance and COBRA: Sometimes You Can Take It with You appeared first on Austin Asset.

Let your Austin Asset team relieve you of these stresses by determining competitive prices across the local dealer market, providing greater transparency for surprise costs, and connecting you with our network of trusted dealers for both purchase and continuing maintenance needs.

When discussing the car buying process, we’re often met with a common question—to buy or to lease? Unfortunately, there isn’t a definitive answer. Buying or leasing a vehicle is a decision dependent entirely on your needs and preferences. Here are a few questions for you to ask yourself to help clarify the process:

How long will you keep the car?

Leases typically run two to four years, a great choice if you’d prefer to drive a new car every few years. If you’d prefer another option for equity, consider buying.

How large of a monthly payment can you afford?

When you buy a car, your payments are based on the total purchase price of that car. With leasing, however, your payments are based on the car’s expected decrease in value over the term of the lease (i.e., its depreciation). The lease payments may be low enough to put you behind the wheel of your dream car, without the need to place a down payment instead providing your first payment and a security deposit.

How will you treat the car?

Analyze your driving habits. A typical lease will include 12,000 to 15,000 miles per year. If you exceed this amount, you may have to pay extra (e.g., $0.15 per mile) at the end of your lease. So, if you travel great distances for work or intend to take any cross-country trips, buying may be the better option.

Also, consider your surroundings. Most lease agreements allow only normal wear and tear. If you know you are tough on your car or live in a neighborhood with street parking only, a lease may not be the best choice. Remember, if you lease a car, you must pay for any non-warranty repairs (e.g., a dent in the door) which benefit the leasing agency, not you. When you buy a car, it’s yours to do with as you please—you decide if the dent in the door gets fixed.

When you’re ready to move forward with purchasing your vehicle, we will provide you with information and resources to make the best decision but, our true aim is to ensure that you have a positive experience and lessen any burden so that you can truly enjoy today.

The post You Drive, We’ll Navigate: The Car Buying Process appeared first on Austin Asset.

College costs

According to The College Board’s 2018 Trends in College Pricing report, the average annual cost for the 2018/2019 academic year at a four-year public college is $25,890 for an in-state student and $41,950 for an out-of-state student. If attending a four-year private college, the average increases to $52,500 and is unaffected by student residency. These figures include tuition and fees, room and board, books, transportation, and personal expenses.

It’s likely that costs will continue to rise, but by how much? Annual increases in the range of 3% to 6% would be in keeping with historical trends, but the actual percentage increase could vary by year and by type of college (i.e., public or private).

How will I pay for it?

Many parents save less than 100% of their child’s education costs before college. Typically, they set aside enough to make a down payment in the same way you might purchase a home. Then, when classes begin, parents often supplement this down payment with one or more of the following:

• Current income
• Federal and college student-based financial aid (e.g., student loans, grants, scholarships, and/or work-study)
• Investments (e.g., 529 plan, mutual funds)
• Child’s savings and/or earnings from a part-time job
• Federal Parent PLUS Loan
• Home equity loan or other private loans
• Gifts from grandparents

How much should I save?

Start by estimating your child’s costs for four years of college. Then use a financial calculator to determine how much money you’ll need to put aside each month or year to meet your goal. In many cases, the amount of money you set aside really comes down to how much you can afford to save.

Start saving as early as possible

Perhaps the most challenging time to start a college savings program is when your child is young. New parents face many financial demands that always seem to take over—the possible loss of one income, child-related spending, the competing need to save for a house or car, or the demands of your own student loans. Yet, this is when you should start saving.

When your child is young, you have time to select investments that have the potential to outpace college cost increases, though investments that offer higher potential returns may involve greater risk of loss. This table shows what a consistent monthly investment might grow to look like:

Note: Table assumes an annual 6% return. This is a hypothetical example and is not intended to reflect the actual performance of any investment. Rates of return will vary over time, particularly for long-term investments. Investments with the potential for higher rates of return also carry a greater degree of risk of loss. Fees and expenses are not considered and would reduce the performance shown if included.

You’ll also benefit from compounding, which is the process of earning additional returns on the interest and/or capital gains that you reinvest along the way. With regular investments spread over many years, you may be surprised at how much you might be able to accumulate in their college fund. If you can’t save hundreds of dollars every month early on, start with whatever amount is comfortable and increase it as you’re able. Remember, every dollar makes a difference in your child’s future and can be a huge help when looking to prepare your child for college.

The post Preparing Your Child (and Your Finances) for College appeared first on Austin Asset.

Donate appreciated securities

If you donate a stock that has appreciated, there are two ways you can save: first, stock appreciation isn’t taxed, and second, if you itemize deductions on your tax return, you might be able to deduct the full value of the stock.

Itemize deductions every other year

The Tax Cuts and Jobs Act of 2017 (TCJA) increased the standard deduction amount dramatically, causing most taxpayers to favor the standard deduction instead of itemized deductions. Taking the standard deduction, while simplifying tax preparation, will cause you to lose any tax benefits from making charitable contributions. By grouping your charitable contributions every other year, you can itemize—and save taxes—every other year.

Donor-advised funds

High-income taxpayers who want to contribute significant amounts to their church or charity may consider a donor-advised fund. This vehicle allows the taxpayer to make a large deductible contribution to itemize that year and then instruct the donor-advised fund to release a specified annual amount to the organization in the coming years.

Qualified charitable distributions

Upon turning 70½ years old, taxpayers must begin taking Required Minimum Distributions (RMDs) from their Individual Retirement Accounts (IRAs). These distributions are taxable and must be taken from the account even if the taxpayer does not need the money for fundamentals. One way to reduce or eliminate the taxes is to make a Qualified Charitable Distribution (QCD) directly from your IRA to your chosen charity or non-profit as QCDs are not taxable and can satisfy part (or all) the annual RMD requirement.

The post Tactical Giving: Charitable Contributions and Tax Savings Strategies appeared first on Austin Asset.

If the latest massive data breach has you wondering if there’s something you can do to protect yourself — there is. The first option is to take the reactive approach and simply monitor your credit. The second is to be more proactive and freeze your credit, making it very difficult for anyone other than you to take out credit in your name. This means even if a criminal obtains enough information to open an account, they’ll have a number of obstacles preventing them from using it.

Under the Economic Growth, Regulatory Relief, and Consumer Protection Act—effective since September 2018—you can freeze your credit free of charge. This began in 2017 when consumer advocates called on Congress to provide free access as, previously, each of the three credit bureaus could charge for the service and to unfreeze or “thaw” credit (useful for anything requiring a credit check).

WHAT DOES FREEZING MY CREDIT DO?

When you freeze your credit, the credit reporting bureaus can’t give any information to anyone who makes an inquiry about you. Typically, businesses inquire about your credit when you, or someone posing as you, attempts to open a new credit card, buy a car, or rent an apartment. The credit check helps the business determine if they want to lend or rent to you and can help set your rates and lending terms for loans and credit cards.
If your credit is frozen, the business can’t get any information about you which typically stops the process and means a fraudster can’t open an account while using your identity.

WHY DOESN’T EVERYONE FREEZE THEIR CREDIT?

Though freezing your credit won’t guarantee safety, it’s a pretty strong defense against identity theft. You still need to unfreeze your credit if you legitimately want to apply for a loan or line of credit. While this is not a heavy burden, it does add extra steps anytime you do something that requires a credit check.
While reactive, credit monitoring is a viable alternative to a full freeze. When you pay for a credit-monitoring service, you’ll get alerts about any activity involving your credit report. This can quickly bring a potential problem to your attention—but you won’t know if someone has used your identity until after it happens.
You can always request a free copy of your credit report annually from each of the major credit bureaus and check it for any activity you don’t recognize. If you do find anything suspicious, report it immediately and take steps to lock down your credit through a fraud alert or credit freeze.

HOW DO I FREEZE MY CREDIT?

If you want to freeze your credit, you need to do it at each of the three major credit bureaus: Equifax (1-800-349-9960), TransUnion (1-888-909-8872) and Experian (1-888-397-3742). If you request a freeze, be sure to store the passwords needed to thaw your credit in a safe place.
Whether or not you choose to freeze your credit, fraudsters can still take advantage by obtaining information like your credit card number(s) or passwords to online accounts. Make sure you’re taking the proper steps to secure your information and keep it from falling into the wrong hands.

The post Why You Should Consider Freezing Your Credit appeared first on Austin Asset.

Earlier today, Austin Public Health announced a move to Stage 5 of their risk-based guidelines in response to the surge. Local medical professionals, many of whom are clients, continue to put themselves in harms way to serve the needs of the community and as such we feel compelled to do our part to lessen the strain on the healthcare system.

Effective immediately, our office will be limited to our staff alone and we will once again rely on virtual meetings for client interactions. It is our hope this most recent spike will be the last of its kind and limited in duration.

We want to thank you for your flexibility and understanding throughout this most bizarre season and assure you we will do everything in our power to continue to deliver the same service you have come to expect from us.

Austin Asset Executive Team

The post A Note to Our Clients Regarding COVID-19 appeared first on Austin Asset.

Federal and state income taxes

The IRS has postponed the due date for filing federal income tax returns and making tax payments from April 15, 2020, to July 15, 2020. No interest, penalties, or additions to tax will be incurred by taxpayers during this 90-day period for any return or payment postponed under this relief provision.

The relief is automatically given to all taxpayers (they do not need to file any additional forms to qualify) and applies to federal income tax payments (for taxable year 2019) and estimated tax payments (for taxable year 2020) due on April 15, 2020, including payments of tax on self-employment income. There is no limit on the amount of tax that can be deferred.

Many state income tax deadlines have also been postponed. You can find more information  on your state government’s website.

REAL ID

The REAL ID Act, passed by Congress in 2005 set minimum security standards for state-issued driver’s licenses and identification cards. Under the Act, residents of every state and territory are required to have a REAL ID-compliant license/identification card, or another acceptable form of identification (such as a passport), in order to access federal facilities, enter nuclear power plants, and board commercial aircraft.¹

The initial deadline for REAL ID compliance was October 1, 2020. As a result of the pandemic, the U.S. Department of Homeland Security has extended the deadline  to October 1, 2021.   For more information, visit  dhs.gov/real-id.

Driver’s license and vehicle registrations

Many state departments of motor vehicles have temporarily closed or limited in-person transactions due to the pandemic.  As a result, they are giving extensions/waiving deadlines for driver’s license and vehicle registration renewals —  in some cases up to 90 days.  Some states have even waived road test requirements for teenagers who have completed all their driver’s education requirements.

Visit your state’s department of motor vehicles website for more information on the various deadlines/extensions and to find out which types of transactions can be completed online; many states have expanded their online services during the pandemic.

Local property taxes

Many municipalities are offering economic relief to homeowners during the pandemic by extending property tax deadlines or waiving penalties/fees for late property tax payments.  This type of tax relief usually applies only to individuals who pay their property taxes directly and not those whose property taxes are collected in an escrow account by their loan servicer. You can contact your local government’s tax office to check whether property tax deadlines have been postponed.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

1. Department of Homeland Security, March 2020

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The post CARES Act 2020: What This Means for You – Newsletter appeared first on Austin Asset.

Regardless of the status of these programs, business owners should familiarize themselves with all available aid to help ensure they are taking maximum advantage of the new laws, as well as other potential resources.

Programs administered by the Small Business Administration (SBA)

Paycheck Protection Program (PPP)

Details: As part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act signed on March 27, 2020, the PPP was originally funded by a $350 billion allocation. It is a first-come, first-served, forgivable loan program designed to encourage employers to keep paying all their employees, even if the businesses have been forced to shutter due to the virus. In order to take advantage of the program, small-business owners must submit an application to a participating lender, which then works with the Small Business Administration to guarantee the loan.

Loans can be for up to 2.5 times an employer’s average monthly payroll for the last year (up to an annualized maximum of $100,000 for each employee, $10 million in total) and may be used for expenses incurred between February 15, 2020, and June 30, 2020.

Note: Seasonal or new businesses will use different time periods to calculate the loan amount.

Loans may be forgiven as long as the employer uses the proceeds for payroll, rent, mortgage interest, and utilities over an eight-week period from the date of loan issuance. At least 75% of the forgiven amount must be used for payroll. Forgiveness is based on the employer maintaining or rehiring employees by June 30, 2020, and restoring salary levels. The amount forgiven will be reduced if full-time headcount declines or if wages decrease more than 25%.

Amounts not forgiven will have to be paid back over a two-year period at a 1% interest rate. Loan payments will be deferred for six months, and no collateral or personal guarantees are required. Moreover, no fees may be charged, either by the federal government or the lender.

Eligible employers: Businesses that may apply include those with 500 or fewer employees (or, if more than 500, those meeting the SBA’s industry size standard); accommodations and food services businesses that have multiple locations employing no more than 500 employees per location; certain nonprofits and veterans organizations; sole proprietors, independent contractors, and the self-employed.

Status: On April 16, 2020, after guaranteeing 1.6 million loans under the PPP, the SBA stopped accepting applications when the funding was exhausted. Subsequently, many small businesses complained that they were shut out of the program, while large restaurant corporations were able to secure tens of millions of dollars in loans. On April 23, the Treasury Department updated its FAQ guidance to address this issue, saying, “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith” that the loan is necessary to support the company’s ongoing operations. As such, many large corporations have been returning their loan proceeds, and the Treasury Department has said that any such company that repays its loan by May 7 will be treated as if it had acted in good faith. On the same day, Congress passed the Paycheck Protection Program and Health Care Enhancement Act, allocating an additional $310 billion toward the fund, $60 billion of which will be designated for small, midsize, and community lenders. During an online panel discussion on April 24, Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce, recommended that small businesses that had previously applied for a loan but had not yet received approval should reach out to their lenders to ask about the status. He noted that funds are expected to run out quickly, and that further guidance is expected from the Treasury Department on various aspects of the loan program.

Economic Injury Disaster Loan (EIDL) program

Details: As part of the Coronavirus Preparedness and Response Supplemental Appropriations Act signed on March 6, 2020, Congress set aside additional funding for small-business disaster assistance. The EIDL program offers low-interest federal disaster loans to small businesses throughout the United States that suffer substantial economic injury due to COVID-19. Loans of up to $2 million can be used for many different types of expenses, including payroll, accounts payable, fixed debts, real estate payments, and other bills. Interest rates are 3.75% for small businesses with no other available credit and 2.75% for nonprofits. Payment can be spread over long time periods, as much as 30 years. The program is scheduled to last through December 31, 2020.

Subsequently, a provision in the CARES Act allowed for EIDL loan advances of up to $10,000 to small businesses facing a temporary loss of revenue. The loan advance does not have to be repaid (i.e., it is essentially a grant) and is intended to provide a much-needed influx of cash more quickly than the EIDL loans. These grants can be used to meet certain immediate expenses, including rent or mortgage and paying sick leave to employees affected by COVID-19.

Eligible employers: Businesses that may apply are those with fewer than 500 employees, including sole proprietors, independent contractors, and self-employed individuals affected by COVID-19. Businesses with more than 500 employees may be eligible if they meet the SBA’s industry size standards.

Status: This program was also put on hold earlier in April after initial funding was exhausted. Due to the Paycheck Protection Program and Health Care Enhancement Act, the program will receive an additional $60 billion. Farmers and ranchers with 500 or fewer employees are now eligible for the EIDL program. As of this writing, the SBA website says, “SBA will resume processing EIDL loan and advance applications that are already in queue on a first-come, first-served basis. We will provide further information on the availability of the EIDL portal to receive new applications (including those from agricultural enterprises) as soon as possible.”

SBA Express Bridge Loan program

These loans allow small businesses that currently have a relationship with an SBA Express lender to quickly access up to $25,000 to help replace a loss of revenue. They can be either term loans or used to bridge the gap while business owners await disbursement on an EIDL. The loans will be paid in full or in part by proceeds from the EIDL loan.

SBA Debt Relief program

The SBA will automatically pay the principal, interest, and fees of 7(a), 504, and microloans for six months for both current loans and new loans issued before September 27, 2020. The program also provides assistance to businesses that held an SBA-serviced disaster (home and business) loan that was in regular servicing status on March 1, 2020. The SBA is providing automatic deferments through December 31, 2020.

Note: Interest on the disaster loans will continue to accrue during the deferment period. Borrowers who have set up an automatic payment program will need to cancel those payments if they choose to take advantage of the deferment program and will need to reestablish the automatic payments.

Employee leave and associated employer tax credits

The Family First Coronavirus Response Act (FFCRA) signed on March 18, 2020, ushered in provisions designed to protect employees affected by COVID-19, while providing relief to their employers.

Family and medical leave

The Family and Medical Leave Act (FMLA) was expanded to cover employees who are unable to work due to a need to care for a child whose school or day care is closed, or whose provider is unavailable due to a “public health emergency.” Employees will receive at least two-thirds of their regular pay, up to $200 per day and $10,000 over the benefit period. The first 10 days may be taken unpaid, but the employee may use other available paid leave during that time frame.

Up to 10 weeks of leave may be taken toward the family leave credit. The provision  is in effect from April 1, 2020, through December 31, 2020, and applies to employees covered by Title I of the FMLA. Applicable employers include private businesses with fewer than 500 employees and all public employers.

Note: Employers with fewer than 50 employees may be exempt if compliance would jeopardize the viability of the business. Health-care and first-responder employees may be excluded.

Emergency paid sick leave

This provision covers qualified employees who are unable to work (or telework) because they are subject to a quarantine or isolation order, have been advised by a health-care provider to self-quarantine due to coronavirus concerns, or are experiencing symptoms of coronavirus and are seeking a medical diagnosis. Employees will receive up to two weeks (80 hours) of their regular pay (or, if higher, the federal, state, or local minimum wage), up to $511 per day for a maximum of $5,110 over the benefit period.

An employee who is caring for someone with coronavirus, or caring for a child because the child’s school or day care is closed or whose child-care provider is unavailable, may receive up to two weeks (80 hours) of sick leave at two-thirds of the employee’s regular pay (or the federal, state, or local minimum wage, if higher), up to $200 per day for a maximum of $2,000.

The provision covers the same period as the expanded FMLA (April 1, 2020, to December 31, 2020) and applies to the same employers.

Note: Employers may exclude certain health-care workers and first responders. Small businesses with fewer than 50 employees are exempt from the requirement to provide paid sick leave to employees who are caring for their child due to the applicable reasons if compliance would jeopardize the viability of the business.

Associated tax credits

Eligible employers can receive a tax credit for the full amount of coronavirus-related sick and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave for the covered period. The refundable credit is applied against certain employment taxes on wages paid to all employees.

Self-employed individuals may be eligible for qualified sick leave equivalent tax credits (also for a maximum of 10 days):

• Lesser of $511 or 100% of average daily self-employment income due to COVID-19 symptoms or a local quarantine/isolation order
• Lesser of $200 per day or 67% of average daily self-employment income if caring for someone with coronavirus or caring for a child due to a coronavirus-related reason (including child’s school closure)

Employee Retention Tax Credit

Employers whose operations have been partially or fully suspended due to mandated shutdowns, or whose gross receipts have experienced a significant decline year-over-year compared to 2019, are eligible for an employee retention credit equal to $5,000 per employee (50% of up to $10,000 in qualified wages, including health plan expenses) paid after March 12, 2020, and before January 1, 2021.

The credit applies against certain employment taxes on wages paid to all employees. Employers may reduce federal employment tax deposits in anticipation of this credit and may request an advance for any amounts not covered by this reduction.

Note: According to the U.S. Chamber of Commerce, businesses cannot take associated tax credits and receive a PPP loan.

Employer Payroll Tax Deferral

A CARES Act provision allows employers to defer the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes. Deferrals may occur between March 27, 2020, and December 31, 2020.

Note: Businesses may not defer the deposit and payment of these taxes after the employer receives loan forgiveness under the PPP.

State, regional, and local assistance

In addition to the numerous federal initiatives, many states and localities are implementing their own programs. Small businesses in need of support should reach out to these agencies to research opportunities that may be available. The U.S. Chamber of Commerce has an online resource designed to help small-business owners investigate state programs.

Additional resources

For information on the Paycheck Protection Program, review the U.S. Treasury Department Information Sheet. For more information on other SBA-backed programs, visit the Small Business Administration. For more information on coronavirus-related employer tax credits, visit the IRS.

Finally, the U.S. Chamber of Commerce has launched the Save Small Business Initiative, a nationwide program to provide supplemental funding, resources and webinars, research, and advocacy to support small businesses affected by the COVID-19 crisis. For more information, visit the Save Small Business Initiative website.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

Sources: U.S. Department of the Treasury; Small Business Administration; Kaiser Family Foundation; National Federation of Independent Businesses; Inc. magazine; U.S. Chamber of Commerce; and The Wall Street Journal

The post Small Businesses Eligible for Numerous Relief Programs During COVID-19 Crisis, Not just PPP and EIDL appeared first on Austin Asset.

You generally have 31 days from the day you leave your employer to submit an application. In most cases, you can apply for any kind of individual life insurance that the company offers. The insurance company generally will not include any supplemental coverages, such as disability insurance, that may have been included with your group life coverage.

If you decide to convert to a permanent life insurance policy, the premium will be based on your current age and the same amount of insurance that your group policy provides. The premiums must be based on standard or regular rates. No medical exam is generally required. This is especially important if you are not in good health when you leave employment.

Even if you don’t take advantage of a conversion privilege when you leave your company, your group life coverage generally continues for 31 days after your last day of work.

For details on your specific plan check in with your human resources manager.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

The post If I leave my company, can I take my life insurance policy with me? appeared first on Austin Asset.

Am I eligible?

Although specific eligibility requirements vary from state to state, most states have the same basic standards for collecting unemployment benefits. They include:

• You must be unemployed or working less than full time
• You must meet certain income requirements
• You must be ready, willing, and able to work
• You must have involuntarily left your job

In general, you won’t be eligible for benefits if:

• You quit your job simply because you didn’t like it
• You’re fired for committing a crime (e.g., stealing)
• You’ve never worked before

For more information, contact your state’s local employment office. You can also look in the state government section of your phone book under Unemployment Insurance, Unemployment Compensation, Employment Insurance, or Employment Service. Or, you can try surfing the Internet using these same key terms.

Where does the money come from?

In most states, unemployment compensation is financed by employer contributions through a payroll tax. In a few states, employees are also required to contribute a minimal amount to the fund.

How do I apply?

Most states will allow you to apply for benefits:

• In person
• By telephone
• By mail

When filling out the application, you’ll be asked a lot of questions, so have the following information handy:

• Your Social Security number
• Your last employer’s name, address, and phone number
• Your last day of work and the reason that you’re no longer working
• Your salary history
• Your proof-of-citizenship status

How are benefits calculated?

Regardless of which state you live in, you’ll receive a weekly unemployment benefit based on how long you were employed and your prior wages. The state will calculate your average weekly wage, and you will receive a percentage of that wage based on your state’s formula. You can figure out your average weekly wage by adding up 12 months’ worth of pay stubs and dividing that number by 52. If you were salaried, just divide your annual salary by 52.

How long can I receive benefits?

In most states, you can receive benefits for up to 26 weeks. However, federal laws and some state laws provide for additional benefits to be paid to workers who exhaust their regular benefits during periods of high unemployment. These additional benefits may generally be paid up to 14 weeks (20 weeks in some states) and are funded partly by state governments and partly by the federal government.

Are unemployment benefits taxable?

The answer to this question comes as a big surprise to many people. Yes, the unemployment compensation you receive is generally taxable. In some states, you can ask that taxes be withheld from your unemployment check. This could save you from a big tax bill at the end of the year. For more information, consult your tax advisor.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

The post Receiving Unemployment Benefits appeared first on Austin Asset.

Schemes related to economic impact payments

The IRS recently issued a warning about various schemes related to economic impact payments that are being sent to taxpayers under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.¹ The IRS warns taxpayers to be aware of scammers who:

• Use words such as “stimulus check” or “stimulus payment” instead of the official term, “economic impact payment”
• Ask you to “sign up” for your economic impact payment check
• Contact you by phone, email, text or social media for verification of personal and/or banking information to receive or speed up your economic impact payment

In most cases, the IRS will deposit the economic impact payment directly into an account that taxpayers previously provided on their tax returns.  If taxpayers have previously filed their taxes but not provided direct-deposit information to the IRS, they will be able to provide their banking information online at  irs.gov/coronavirus.  If the IRS does not have a taxpayer’s direct-deposit information, a check will be mailed to the taxpayer’s address on file with the IRS. In addition, the IRS is reminding Social Security recipients who normally don’t file taxes that no additional action or information is needed on their part to receive the $1,200 economic payment — it will be sent to them automatically.

Fraudulent  treatments, vaccinations, and home test kits

The Federal Trade Commission is tracking scam artists who are attempting to sell fraudulent products that claim to treat, prevent, or diagnose COVID-19. Currently, the U.S. Food and Drug Administration (FDA) has not approved any products designed specifically to treat or prevent COVID-19.

The FDA had warned consumers in March to be wary of companies selling unauthorized coronavirus home testing kits.  On April 21, 2020, the FDA authorized the first coronavirus test kit for home use.  According to the FDA, the test kits will be available to consumers in most states, with a doctor’s order, in the coming weeks. You can visit fda.gov for more information.

Phishing scams

Scammers have begun using phishing scams related to the coronavirus pandemic in order to obtain personal and financial information.  Phishing scams usually involve unsolicited phone calls, emails, text messages, or fake websites that pose as legitimate organizations and try to convince you to provide personal or financial information. Once scam artists obtain this information, they use it to commit identity or financial theft.  Be wary of  anyone claiming to be from an official organization, such as the Centers for Disease Control and Prevention or the World Health Organization,  or nongovernment websites  with domain names that include the words “coronavirus” or “COVID-19,” as they are likely to be malicious.

Charity fraud

Many charitable organizations are dedicated to helping those affected by COVID-19.  Scammers often pose as legitimate charitable organizations in order to solicit donations from unsuspecting donors. Be wary of charities with names that are similar to more familiar or nationally known organizations. Before     donating to a charity, make sure that it is legitimate and never donate cash, gift cards, or funds by wire transfer.  The IRS website has a tool to assist you in checking out the status of a charitable organization at  irs.gov/charities-and-nonprofits.

Protecting yourself from scams

Fortunately,  there are some things you can do to protect yourself from scams, including those related to the coronavirus pandemic:

• Don’t click on suspicious or unfamiliar links in emails, text messages, and instant messaging services.
• Don’t answer a phone call if you don’t recognize the phone number — instead, let it go to voicemail and check later to verify the caller.
• Never download email attachments unless you can verify that the sender is legitimate.
• Keep device and security software up-to-date, maintain strong passwords, and use multi-factor authentication.
• Never share personal or financial information via email, text message, or over the phone.
• If you see a scam related to the coronavirus, be sure to report it to the FTC at gov/complaint.

¹Internal Revenue Service, IR-2020-64, April 2, 2020

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If you are investing a specific amount regularly regardless of fluctuating price levels (as in a typical workplace retirement plan), you are practicing dollar-cost averaging. Using this approach, you may be getting a bargain by continuing to buy when prices are down. However, you should consider your financial and psychological ability to continue purchases through periods of fluctuating price levels or economic distress; dollar-cost averaging loses much of its benefit if you stop just when prices are reduced. And it can’t guarantee a profit or protect against a loss.

If you can’t bring yourself to invest during this period of uncertainty, try not to let the volatility derail your savings program completely. If necessary, to help address your concerns, you could continue to save, but direct new savings into a cash-alternative investment until your comfort level rises. Though you might not be buying at a discount, you could be accumulating cash reserves that could be invested when you’re ready.  The key is not to let short-term anxiety make you forget your long-term plan.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

If you need help or are looking to have a conversation, we are here for you.

All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.

The post Coping with Market Volatility: Continuing to Invest May Help You Stay on Course appeared first on Austin Asset.

What new relief is being offered?

The new legislation provides a six-month automatic payment suspension (administrative forbearance) for any student loan held by the federal government. This six-month period ends on September 30, 2020.  Borrowers do not need to contact their loan servicer to request a suspension; they will be automatically placed in administrative forbearance. Under the previous policy, the payment suspension was for two months and it was not automatic; borrowers had to contact their loan servicer to opt in.

The new stimulus legislation also provides a temporary incentive for employers to pay down their employees’ student debt balances. Specifically, employers are able to contribute up to $5,250 toward an employee’s student debt through December 31, 2020 without any tax consequences for the employee.

What loans qualify for the suspension?

Only student loans held by the federal government are eligible. This includes Direct Loans (which includes PLUS Loans), as well as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by the Department of Education. Private student loans are not eligible.

Will interest continue to accrue during the suspension period?

No. Interest will not accrue during the six-month suspension period. The interest rate is being set at 0%. Also, due to the Department of Education’s earlier student loan relief rules, the interest rate on all eligible federal student loans is effectively set at 0% from March 13, 2020 through September 30, 2020.

What happens with auto-debit payments?

Auto-debit payments are suspended during the administrative forbearance period. Any auto-debit payments processed between March 13, 2020 and September 30, 2020 can be refunded. Borrowers should contact their loan servicer if they wish to request a refund.

Can borrowers keep making their student loan payments?

Yes. Borrowers can choose to keep making their monthly student loan payments during the six-month suspension period if they wish. Borrowers should contact their loan servicer to opt out of the administrative forbearance period and continue their auto-debit payments. Borrowers also have the option to make manual (i.e., not auto-debit) payments during the administrative forbearance period.

During this period of 0% interest, the full amount of a borrower’s payment will be applied to principal (once all interest accrued prior to March 13, 2020, is paid). Borrowers can also choose to make partial payments during the suspension period.

How will the suspension period affect the Public Service Loan Forgiveness Program?

Under the Public Service Loan Forgiveness (PSLF) Program, borrowers who work in an eligible public service job and make 120 on-time student loan payments are eligible to have the remaining balance on their federal Direct Loans forgiven.² Under the new legislation, the six-month freeze on student loan payments will not affect the 120-month running period for purposes of the PSLF program. In other words, each month of the suspension period will still count toward a borrower’s 120-payment tally, even if the borrower does not make any payments during the six-month period.

How can borrowers contact their loan servicer?

A loan servicer is the company that handles a loan’s billing and provides related services. Borrowers who want to contact their loan servicer for any reason should try to do so online or by phone. For borrowers who do not know who their loan servicer is or how to contact them, they can visit studentaid.gov/login or call 1-800-4-FED-AID for assistance.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

If you need help or are looking to have a conversation, we are here for you.

1) Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted March 27, 2020

2) U.S. Department of Education, Office of Federal Student Aid, 2020

The post Federal Student Loan Borrowers Get Expanded Relief in CARES Act appeared first on Austin Asset.

The economy — in the United States and globally — has been interrupted as abruptly as our daily routines, and a downturn is looming. This jarring reality triggered the first bear market for U.S. stocks in 11 years.²  Many people are now working from home, but a record number of workers (6.6 million) filed for unemployment in two harrowing weeks.³

The financial impact of the health crisis is likely to be more severe for some households, businesses, and industries than others. With lives and livelihoods at risk, the Federal Reserve, state governments, and the federal government have responded with a full slate of emergency measures.

Central bank in action

The Federal Reserve moved swiftly in recent weeks to support the U.S. economy and help alleviate stress in the financial markets. On March 3, the Fed dropped the target range for the benchmark federal funds rate by one-half percentage point to 1.00% to 1.25%, stating that the coronavirus posed evolving risks to the economic outlook.⁴

Following an emergency session on Sunday, March 15, the Fed slashed the rate to near zero (0% to 0.25%) and committed to at least $700 billion in debt purchases. This policy was later expanded to essentially unlimited debt purchases “in amounts needed to support smooth market functioning.” The U.S. central bank is also extending currency swaps with foreign central banks to keep high-demand U.S. dollars flowing freely around the world.⁵

Citing emergency powers, the Federal Reserve launched a number of lending facilities to keep credit flowing to households and businesses. These operations required permission from the Treasury Secretary and are protected from losses with Treasury funds.⁶

The Commercial Paper Funding Facility ensures that companies retain access to an important source of short-term credit (IOUs) often used to fund regular expenses including payroll and rent. The Primary Dealer Credit Facility provides funding to financial institutions that trade directly with the Fed and serve as market makers for U.S. Treasuries.⁷

The Money Market Mutual Fund Liquidity Facility will help ensure that funds can meet investor demand for redemptions. This backstop was originally limited to prime funds, which invest in short-term corporate debt, but was expanded to include funds with municipal debt. A crisis-era lending facility used to support the consumer and business credit market has also been revived.⁸

Two facilities have been added to support corporate debt markets. One will provide four-year bridge financing to companies with investment-grade ratings, and the other will purchase highly-rated U.S. corporate bonds. A Main Street Business Lending Program for small employers is also in the works.⁹

Chairman Powell has said the Fed will do everything in its power to help stabilize the markets, so lending programs could be added or expanded.¹⁰

Relief on the way

The federal tax filing deadline has been delayed to July 15, so taxpayers have extra time to file their tax returns and make payments without interest or penalties. Many states have decided to match the new federal deadline.¹¹

An initial relief bill passed in early March provided $8.3 billion in emergency healthcare funding. A phase two relief package, the Families First Coronavirus Response Act, includes free coronavirus testing and increased funding for food security programs, Medicaid, and unemployment insurance.¹²

This bill also provides two weeks of paid sick leave and up to 12 weeks of family and medical leave for workers at companies with 500 or fewer employees who are affected by the virus. This includes those caring for children whose schools are closed. Small and midsize employers will be reimbursed with tax credits for wages paid to affected workers.¹³

The $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is the most generous stimulus package in U.S. history. Many households will receive cash payments ($1,200 per adult and $500 per child) from the IRS within weeks if their incomes fall under certain thresholds. Unemployment insurance was prolonged from 26 to 39 weeks and will provide an extra $600 per week for four months. This benefit was extended to self-employed individuals, gig workers, and independent contractors who would not have qualified under the old rules.¹⁴

A $500 billion lifeline could backstop trillions in bridge loans and offer some direct aid for hard-hit cities, states, and large employers. The government can seek company equity in extreme cases. Another $349 billion will fund loans for small businesses (under 500 employees); eligible employers can borrow up to $10 million for working capital through an existing Small Business Administration program. Many paperwork requirements have been waived, and amounts paid for mortgage interest, rent, utilities, and payrolls could be forgiven if workers are retained.¹⁵

The scope of losses may ultimately depend on how quickly the spread of the virus is controlled and effective treatments and/or a vaccine are developed so the economy can reopen. But there is hope that the government policy response will save lives and help mitigate the economic effects.

Although these times are stressful for everyone, it may help to keep in mind that the U.S. economy is much like the people who live here — resourceful and resilient. We have endured shocks and recovered from serious crises before, and we can do so again.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

If you need help or are looking to have a conversation, we are here for you.

All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful.

1) The White House, March 18, 2020

2) Yahoo! Finance, 2020 (data for the period 3/9/2009 to 3/12/2020)

3) The Washington Post, April 9, 2020

4-10) Federal Reserve, March 2020

11) Bloomberg.com, March 20, 2020

12-13) Bloomberg.com, March 18, 2020

14-15) The Wall Street Journal, March 25-26, 2020

The post Government Acts to Blunt Financial Impact of Global Pandemic appeared first on Austin Asset.

One way to do that is by reviewing your portfolio to determine if it’s time to rebalance your asset allocation or modify your level of diversification.

Rebalancing means adjusting your portfolio to get it back to your original target allocation. In today’s market, it often makes sense to first determine whether that original target is still appropriate for your needs. If it makes sense to return to your original allocation or establish a new one, there are two ways to proceed. You can sell securities in some asset classes and invest the proceeds in others, and/or redirect new investment dollars into selected asset classes until the target allocation is reached.

If your current allocation is appropriate, but there are concerns with your overall level of diversification, it’s possible to shift some investments within a given asset class. Keep in mind that selling securities can have tax consequences, depending on account type.

Asset allocation and diversification can help manage investment risk and might better position your portfolio for the future. The silver lining to broad-based market turmoil is that you may be able to acquire some investments at a discount relative to what you would have paid when the market was up.

Although there is no assurance that working with a financial advisor will improve investment results, an advisor can evaluate your objectives and available resources and help you consider appropriate long-term financial strategies.

At Austin Asset, we are Fee-Only Financial Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

If you need help or are looking to have a conversation, we are here for you.

The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. Asset allocation and diversification are methods used to help manage investment risk; they do not guarantee a profit or protect against investment loss.

The post Coping with Market Volatility: Could This Be a Chance to Rebalance at a Discount? appeared first on Austin Asset.

Due to the coronavirus pandemic, the due date for filing federal income tax returns and making tax payments has been postponed by the IRS from Wednesday, April 15, 2020, to Wednesday, July 15, 2020. No interest, penalties, or additions to tax will be incurred by taxpayers during this 90-day relief period for any return or payment postponed under this relief provision.

The relief applies automatically to all taxpayers, and they do not need to file any additional forms to qualify for the relief. The relief applies to federal income tax payments (for taxable year 2019) and estimated tax payments (for taxable year 2020) due on April 15, 2020, including payments of tax on self-employment income. There is no limit on the amount of tax that can be deferred.

Note: Under this relief provision, no extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return.

Need more time?

If you’re not able to file your federal income tax return by the July due date, you can  file for an extension by the July due date using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Filing this extension gives you an additional three months (until October 15, 2020) to file your federal income tax return. You can also file for an automatic three-month extension electronically (details on how to do so can be found in the Form 4868 instructions). There may be penalties for failing to file or for filing late.

Filing for an extension using Form 4868 does not provide any additional time to pay your tax. When you file for an extension, you have to estimate the amount of tax you will owe and pay this amount by the July filing due date. If you don’t pay the amount you’ve estimated, you may owe interest and penalties. In fact, if the IRS believes that your estimate was not reasonable, it may void your extension.

Tax refunds

The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. Apparently, most tax refunds are still being issued within 21 days of the IRS receiving a tax return.

At Austin Asset, we are Wealth Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

This article is not intended as legal or tax advice.

The post Tax Deadline Extension appeared first on Austin Asset.

At Austin Asset, we want to keep you informed and help you get the assistance you need.

Here’s what you need to know about the CARES Act:

Recovery Rebates

• Most taxpayers will get up to $1200, including people already on Social Security and Disability. For each child that is under the age of 17, parents will receive an additional $500
  • Single adults with an AGI of $75,000 or less will get the full amount
  • Married filing jointly with an AGI of $150,000 or less will receive $2,400
  • Head of Household with an AGI of $112,500 or less will receive $1200
• You will not receive any of the rebate if you are:
  • Single with an AGI of $99,000 or more
  • Married filing jointly with an AGI of $198,000 or more
  • Head of household with an AGI of $146,500 or more
• You don’t have to apply for this rebate. The IRS will automatically send you the rebate within the next few weeks. The IRS will either directly deposit the funds in the bank account you use to receive tax refunds or pay taxes owed. Alternatively, if no bank account is on record, they will mail a check to your last known address.
• To determine your rebate, the IRS will either use your 2019 or 2018 tax return, whichever is the most recent on file.

Note: The deadline for filing 2019 taxes is extended to July 15, 2020.

Retirement Accounts

• You will be able to withdraw $100,000 or 100% of the vested account balance from a qualified retirement account for coronavirus related purposes, penalty-free.
• Coronavirus related purposes include:
  • Being diagnosed with COVID-19
  • Spouse or dependent is diagnosed with COVID-19
  • Experience adverse financial consequences as a result of being quarantined, furloughed, laid off, or having work hours reduced
  • Unable to work due to lack of childcare due to COVID-19
  • Lost a business because of COVID-19
  • Other factors as determined by the Treasury Secretary
• You will be able to spread income tax payments on the withdrawals over a three-year period.
• You will be able to repay the amount tax-free back into your plan over the next three years. These repayments will NOT be subject to any retirement plan contribution limits.
• If you have an outstanding loan from your retirement account that was due to be repaid anytime from March 27 through the end of 2020. You can delay this loan repayment for up to 1 year.
• The act waives your required minimum distributions (RMD) for 2020. If you have already taken an RMD for 2020, you will be able to reverse the transaction.
• Any RMD for single-employer defined benefit plans that are due during the 2020 calendar year are not required to be made until January 1, 2021.

Charitable Contributions

• A new above the line deduction for up to $300 in annual charitable contributions has been added. To qualify, cash must be given. This deduction counts towards contributions made since January 1, 2020.

Unemployment

• The federal government will pay an extra $600 per week on top of whatever base amount you receive from the state. This additional payment will last for four months.
• The legislation added 13 weeks of unemployment insurance. People nearing the maximum number of weeks allowed by their state would get an extension.
• This bill creates a new, temporary Pandemic Unemployment Assistance program to provide relief to those who are self-employed, freelancers, or contractors through the end of this year to help people who lose work as a direct result of the public health emergency.

Health Insurance

• The bill requires all private insurance plans to cover COVID-19 treatments and vaccines. It also makes all coronavirus tests free.

Mortgage

• Borrowers under federally backed family mortgages may submit a forbearance request if they are experiencing financial hardship due to the COVID-19 crisis. The lender must grant the request, without penalties, fees, or interest, for a period of up to 180 days (subject to another 180 day extension at borrower’s request). A foreclosure action is prohibited for the 60 day period beginning March 18, 2020. Multi-family borrowers are entitled to forbearance and foreclosure protection on slightly different terms, and renters of such dwellings are provided eviction protection.

If you need help or are looking to have a conversation, we at Austin Asset are here for you.

At Austin Asset, we are Wealth Advisors. We seek to bring clarity and purpose to wealth through authentic and enduring relationships. For Life.

This article is not intended as legal or tax advice.

The post CARES Act 2020: What This Means for You appeared first on Austin Asset.

On March 20, 2020, the Department of Education announced terms for student loan relief for tens of millions of borrowers in response to COVID-19.Ω

Here is what you need to know.

Does the relief apply to all student loan borrowers?

No, unfortunately not. Only borrowers with outstanding federal student loans—not private student loans—are eligible.  In addition, only federal student loans owned by the Department of Education are eligible.  Including Direct Loans (which includes PLUS Loans), as well as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by the Department of Education.

Note: some FFEL Program loans are owned by commercial lenders, and some Perkins Loans are held by educational institutions. These loans are not eligible for relief at this time.

What specific relief is being offered?

There are two parts to this relief: interest waivers and suspension periods.

All borrowers with eligible federal student loans will automatically have their interest rates set to 0% for a period of at least 60 days beginning March 13, 2020. The Department of Education may extend this period, depending on the status of the COVID-19 national emergency at the end of the 60-day period.

Also, borrowers will have the option to suspend their student loan payments temporarily. This administrative forbearance period will last for at least 60 days from March 13, 2020. Again, the Department of Education may extend this period depending on the status of the COVID-19 national emergency after the 60-day period is up.

Will a borrower’s monthly payment go down because interest is being waived?

No. A borrower’s monthly payment will remain the same. During the period of no interest, the full amount of a borrower’s payment will be applied to the outstanding principal after all the interest that accrued before March 13, 2020 is paid.

Is the 60-day suspension of student loan payments automatic?

No. Borrowers will have to request a forbearance with their loan servicer proactively. All federal loan servicers are required to grant an administrative forbearance to any borrower who requests one. If the Department of Education extends the 60-day period for an administrative forbearance, borrowers will be contacted by their loan servicer, who will communicate information about any extension.

For borrowers who request a forbearance, loan servicers are responsible for canceling any scheduled automatic debit payments. At the end of the forbearance period, borrowers will have to re-institute automatic debit payments; they will not automatically resume.

Note: Borrowers who are at least 31 days behind on their payment as of March 13, 2020, or borrowers who become more than 31 days delinquent after that date, will be automatically placed in the administrative forbearance to give them a safety net during the COVID-19 national emergency.

How can borrowers contact their loan servicer?

Borrowers should contact their loan servicer online or by phone. For borrowers who do not know who their servicer is or how to contact them, they can visit studentaid.gov/login or call 1-800-4-FED-AID for assistance.

Can borrowers keep paying their federal student loans?

Yes.  Borrowers are still able to continue their student loan payments as usual and do not need to contact anyone if they wish to keep making payments.

What should borrowers do if they have experienced a change in income?

Borrowers who have experienced a change in income (whether from COVID-19 or another reason) can contact their loan servicer to discuss other options for pausing or lowering their monthly payment. Specifically, traditional deferment and forbearance options can allow borrowers to temporarily stop making monthly loan payments (typically for a period up to six months), while different loan repayment plans may result in a lower monthly payment.

Borrowers who already have an income-driven repayment plan can ask to have their monthly payment recalculated at any time. They should contact their loan servicer for more information.

For more information and to follow subsequent potential rule modifications, visit the federal student aid website.

1. U.S. Department of Education, March 20, 2020; studentaid.gov

Austin Asset is a wealth management firm that seeks to bring clarity and purpose to wealth through authentic and enduring relationships.  For Life.

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