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COVID-19 LEGISLATION THAT AFFECTS YOU

COVID-19 LEGISLATION THAT AFFECTS YOU

COVID-19 LEGISLATION THAT AFFECTS YOU

Now that the stimulus package has been passed by the Senate, it is important for you to know about a few legislative moves that may directly affect you:

  • Included in the current stimulus package is a relief effort for those withdrawing money from their 401K plans. Under the new legislation, the maximum withdrawal amount has not increased to $100,000. It also waives the 10 percent penalty for early withdrawals. The no-penalty allowance applies to “coronavirus-related distributions” for people who are diagnosed with COVID-19 or have experienced financial hardship from quarantine, layoffs, reduced hours, or furlough between now and December 31, 2020. Distributions will still be included in gross income and subject to regular income tax but can be spread out and taken over three years.
  • Several Democratic Senators are backing a bill that would boost Social Security benefits by $200, possibly through the end of 2021. The proposal was put forth as part of the stimulus package but did not become part of the final plan that was passed by the Senate. Still, it is being discussed as a separate proposal. The conventional wisdom is that it would be difficult to get this passed, but some Senate Democrats see it as a viable way to get and additional $4000 in the pockets of Social Security recipients. The increase they are proposing would benefit Social Security, Veterans, and Supplemental Security Income (SSI) beneficiaries.
  • The Senate Banking Committee has proposed a bill to safeguard the public’s credit scores during the current crisis. This bill would protect credit scores for those affected directly or indirectly by COVID-19 for up to four months, as well as provide unlimited free credit reports and scores for one year after the outbreak.
  • By some estimates, up to 90 percent of student loans will be positively affected by the stimulus package. Many federal student loan borrowers have already had two months of student loan payments and interest waived. The stimulus package includes automatic payment suspensions for any student loan held by the federal government until September 30, 2020.

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