This page will be home to all of the COVID-19 resources we create and acquire from our trusted partners, outside of anything pertaining to group health insurance, which you can find on this page.

We’ll be posting periodic updates and new information as we receive it and share it all with you via email and social media posts.

We recommend you bookmark this page and check back daily for the latest news.

Executive Order #123

On April 9th, Governor Phil Murphy signed Executive Order No. 123, extending grace periods during which certain insurance companies, including health insurers, life insurers, and property and casualty insurers, cannot cancel policies for nonpayment of premiums.

As part of its passing, the following are being put in place:

  • Extends minimum grace periods: A minimum 60-day grace period will be required for health and dental insurance policies, and a minimum 90-day grace period will be required for life insurance, insurance premium-financing arrangements, and property and casualty insurance, which includes auto, homeowners, and renters insurance. Insurance companies will be required to notify policyholders of this emergency grace period and to waive certain late fees, interest, or other charges associated with delays in premium payments as directed by the Commissioner of Banking and Insurance. Insurers will also be required to provide each policyholder with an easily readable written description of the terms of the extended grace period. The extended grace periods will not apply to employer-funded health plans, which under federal law, are regulated exclusively by the federal government.
  • Requires insurance companies to pay claims during the grace period: Insurance companies will be required to pay any claim incurred during the emergency grace period that would be covered under the policy. The Order further prohibits insurance companies from seeking recoupment of any claims paid during the emergency grace period based on non-payment of premiums.
  • Ensures that unpaid premiums are made payable over a lengthy period: To ensure that policyholders are not required to make a lump sum payment on unpaid premiums at the end of the grace period, any unpaid premium will be amortized over the remainder of the policy term or a period of up to 12 months, as appropriate and as directed by the Commissioner of Banking and Insurance.

(Published by on 4/9/2020)

The CARES Act & Company Sponsored Retirement Plans

One of our preferred financial partners and President of Absolute Conclusions, LLC, Mark McLafferty, recently discussed the CARES Act, which was passed as a result of the Coronavirus pandemic, and updates for individuals regarding Company Sponsored Retirement Plans.

Watch the video below to hear what he had to say, and continue reading after that to learn more.

(Video Published 4/2/2020)

There have been several changes is legislation making it easier for companies and individuals that participate in certain retirement plans to access money.

There are three important components that we would like our clients to be aware of; loan limits have been doubled, there is no 20% withholding, and 2020 required distribution rules have been removed.

Read further details below.

10% Early Withdrawal Penalty Tax Waived

Waives the 10% early withdrawal penalty tax under IRC Sec. 72(t) on early withdrawals up to $100,000 from a retirement plan or IRA for the following individuals:

  • Those diagnosed with COVID-19
  • Whose spouse or dependent is diagnosed with COVID-19
  • Who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced
  • Those unable to work due to lack of child care due to COVID-19
  • Closing or reducing hours of a business owned or operated by the individual due to COVID-19
  • Or other factors as determined by the Treasury Secretary

The legislation also permits those individuals to pay tax on the income from the distribution ratably over a three-year period and allows individuals to repay that amount tax-free back into the plan over the next three years.

Those repayments would not be subject to the retirement plan contribution limits.

Retirement Plan Loan Limits Doubled

Doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan.

Individuals with an outstanding loan from their plan with a repayment due from the enactment of CARES through Dec. 31, 2020, can delay their loan repayment(s) for up to one year.

Required Minimum Distribution Rules Waived

Temporarily waives of required minimum distribution rules for certain retirement plans and accounts.

This provision waives, for the 2020 calendar year, the required minimum distribution rules for certain defined contribution plans (not defined benefit plans) and IRAs.

The legislation also includes special rules regarding the waiver period to, in essence, hold harmless those individuals (and plans) who took advantage of the RMD waiver for 2020.Allowance of partial above-the-line deduction for charitable contributions and modification to limitations on charitable contribution during 2020.

This provision encourages contributions to charitable organizations during 2020 by permitting an above-the-line deduction of up to $300 for cash contributions, whether an individual itemizes their deductions or claims the standard deduction.

Originally Published on 3/27/20 by: EsinerAmper, LLP

Paycheck Protection Program – Applies to Businesses with Under 500 Employees

  • Provides $349 billion in funding for loans, which can be forgiven
  • Covers the period February 15, 2020, through June 30, 2020
  • Loans will cover:
    • (i) payroll costs
    • (ii) continuation of health care benefits
    • (iii) employee compensation (excluding that portion of compensation in excess of $100K for any individual employee)
    • (iv) mortgage interest obligations
    • (v) rent
    • (vi) utilities and
    • (vii) interest on debt incurred before the covered period.
  • Loan amount will equal 2.5 x the average total monthly payroll costs, up to $10 million.
  • The interest rate may not to exceed 4%.
  • No personal guaranty required
  • No collateral required
  • For eligibility purposes, requires lenders to determine whether a business was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or a paid
  • independent contractor
  • All or a portion of the loan may be forgivable and debt service payments may be deferred for up to 1 year.
  • Borrowers shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination on:
    • (i) rent
    • (ii) payroll costs for workers (excluding that portion of compensation in excess of $100K for any individual employee) including group healthcare expenses
    • (iii) interest on a mortgage
    • (iv) utility payments
  • The amount forgiven may not exceed the principal of the loan.
  • The amount forgiven will be reduced proportionally by any reduction in employees
  • If an employer re-hires workers previously laid off, the employer will not be penalized for having a reduced payroll at the beginning of the period.

Emergency Economic Injury Disaster Loans (“EIDLs”)

  • For the period between January 31, 2020 and December 31, 2020
  • EIDL eligibility is greatly expanded to include any business with not more than 500 employees operating under a sole proprietorship or as an independent contractor
  • EIDLs may be approved solely on the bases of an applicant’s credit score or by use of alternative methods to gauge the applicant’s ability to repay.
  • Applicants may request an advance of up to $10,000 within three days after the Administrator receives the application, subject to verification that the entity is eligible under this program,
  • which can be used for any purpose under §7(b)(2) of the Small Business Act and is not subject to repayment, even if the loan request is ultimately denied.
  • The requirement of personal guarantees for loans up to $200,000 is waived
  • The requirement that the applicant must be in business for a year is waived, but the business must be in operation on January 31, 2020)
  • The credit elsewhere test is waived.
  • This loan can be in addition to the Paycheck Protection Program

Deferment of Existing SBA Loan Payments

  • Covers loans made by the SBA under
    • The SBA Business Loan Program (including the Community Advantage Pilot Program, but excluding the new payroll loan program established under Section 1102); or
    • Title V of the Small Business Investment Act; or
  • SBA Administrator will make the loan payments for borrowers, including principal, interest and any associated fees, owed in a regular servicing status, for:
    • Loans made before this bill was enacted not on deferment for the six-month period beginning when the next payment is due
    • For loans made before this bill was enacted that are on deferment, for the 6-month period beginning with the next payment due after deferment
    • For loans made within 6 months of enactment of this bill, for 6 months after the first payment is due
  • Delay of Payment of Employer Payroll Taxes
    • Employers responsible for paying 6.2% Social Security Tax on employee wages will be allowed to defer paying their share.
    • Half of the deferred amount will be due December 31, 2021, balance due December 31, 2022
  • Additional Tax Benefits for Businesses
    • Modification of Net Operating Losses eliminated 80% limitation and allowing carryback for five years (allows for filing of amended returns for prior years)
    • Modification of the limitation on losses for Non-Corporate Taxpayers, such as individuals, estate and trusts. May allow non-corporate taxpayers to deduct all excess business losses through the end of the 2020 tax year.
    • Acceleration of Refundable Alternative Minimum Tax Credits to tax years 2018-2019
  • Employer Student Loan Payments
    • Employers can provide student loan repayment benefit to employees on a tax-free basis, up to $5,250 annually to each employee.
    • Applied to payments made after the enactment date and before January 1, 2021.

Originally Published on 3/31/20 by: Byrnes, O’Hern & Heugle, LLC