CARES Act Has a Major Clause for Those With Retirement Funds

While the country’s focus is currently on a second stimulus package, the first package that the government sent out — the CARES Act — can still provide assistance to eligible Americans. The Motley Fool reported that there is one significant provision in the CARES Act that can definitely help some out of any of their financial hardships amidst this incredibly difficult time in the country. As the publication even highlighted, many Americans were likely not even aware of this provision.

Under the CARES Act, Americans have the option to take penalty-free withdrawals from their retirement savings plan. Traditionally, if you are under the age of 59 and a half and you take out money from your IPA or 401(k), you are subject to a 10% early withdrawal penalty. But, thanks to the CARES Act, you can withdraw up to $100,000 from your retirement savings account if you have been negatively affected by the coronavirus pandemic and you will not be subject to any penalties or additional fees. There aren’t too many individuals who have engaged in this option, as Vanguard reported that, as of May 31, only 1.9% of savers actually withdrew from their retirement accounts under the CARES Act.

Of course, if you are eager for additional financial assistance amidst the ongoing coronavirus crisis, Congress is busy trying to hammer out details of their next stimulus package. On Monday, Senate Republicans unveiled their new plan, the HEALS Act. The HEALS Act would provide Americans with an additional, one-time check of $1,200, which is the amount that was also given out under the CARES Act. But, the HEALS Act has already drawn criticism from lawmakers on both sides of the aisle, with some saying the plan does not go far enough. One of the biggest criticisms that have been aimed at the HEALS Act concerns unemployment benefits.

While the CARES Act provided Americans with an additional $600 per week in unemployment benefits, the HEALS Act aims to reduce that figure to $200 per week through September. It would then transition to giving out unemployment benefits that would replace 70% of working wages. In response to this proposal, Speaker of the House Nancy Pelosi had some harsh words for the GOP. She said, “Republicans in the Senate came back with a piecemeal approach. Clearly, they and perhaps the White House do not understand the gravity of the situation. This is a freight train that is picking up steam.”