Month: July 2020

The President signed legislation that was approved by both the House of Representatives and the Senate to extend the time to apply for a loan under the Paycheck Protection Program. Businesses will now have until August 8, 2020 to apply for loans under this SBA program. The original deadline to apply for a PPP loan was June 30, 2020.

Since approximately $130 billion still remains in the program, out of $660 billion, Congress sought to extend the application deadline to enable businesses to seek financial assistance to meet additional challenges of the COVID-19 pandemic.

Congress will reconvene after the July 4th recess and consider additional financial support for businesses. Treasury Secretary Steven Mnuchin said that the next round of small business aid will need to be targeted to specific industries that are struggling the most, such as hotels and restaurants.

Another proposal would allow businesses with fewer than 100 employees to take out a second PPP loan. Moreover, there has been discussions within the SBA to completely forgive all PPP loans that are $150,000 or less. This resolution would eliminate the administrative burden placed` on businesses and the SBA to comply with the forgiveness application process.

The IRS recently released Notice 2020-51. This notice provides that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has an additional amount of time to roll those funds back into a retirement account under the CARES Act RMD waiver for 2020.

The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020. This waiver does not apply to defined-benefit plans, such as pensions.

Initially, the IRS permitted a 60-day rollover period for any RMDs already taken this year. This 60-day period has been extended to August 31, 2020, to allow taxpayers additional time to take advantage of this opportunity.

In addition to the rollover opportunity, an IRA owner or beneficiary who has already received an RMD in 2020 can repay the distribution to the IRA by August 31, 2020. The notice provides that this repayment is not subject to the one rollover per 12-month period limitation and the restriction on rollovers for inherited IRAs.

Under Notice 2020-51, the repayment of an IRA distribution by August 31, 2020 is a new method presented by the IRS for anyone to unwind the receipt of an RMD. This relief, however, only applies to IRAs and not 401(k) and 403(b) plans. Under this repayment option the IRA owner or beneficiary simply repays the amount to the distributing IRA.

Importantly, Notice 2020-51 extends the rollover date of all other 2020 RMDs to August 31, 2020.

If you have any questions or need guidance on either repaying or rolling-over a 2020 RMD, please contact us at RGV & Company.