What Your Clients Need To Know About The CARES Act

The Coronavirus Aid, Relief and Economic Security Act contains a number of provisions that can benefit your clients in the midst of the COVID-19 pandemic and market downturn. Don’t wait to reach out to business and individual clients to help them take advantage of this new law. In addition, some portions of the CARES Act can help your own practice.

That was the word from Keith Gillies, CEO of United Wealth Advisors, who was one of the speakers at an online Town Hall Meeting held by the National Association of Insurance and Financial Advisors on Thursday.

“This is an opportunity for you to differentiate yourself from other advisors by providing this service,” Gillies said.

Several portions of the CARES Act benefit small businesses as well as retirement savers. Gillies and NAIFA senior vice president of government relations Diane Boyle gave a rundown of them and urged advisors to educate their clients on how they can use this new law to help get them through an economically challenging time. Some aspects of the CARES Act that advisors need to discuss with clients include:

• Small Business Administration Economic Injury Disaster Loans. Provides opportunities for low-interest loans for small businesses and nonprofits. Discuss all the opportunities with your clients and help them apply for the loan that is best for their needs. Gillies invited advisors who own their own businesses to apply for the SBA loans as well.
• Families First Coronavirus Response Act. Requires certain employers to provide paid sick leave and family leave to workers affected by COVID-19, and reimburses employers with tax credits. Discuss these regulations with business clients so that they know their workers’ rights and know how they can keep their workers on their payrolls.
• Paycheck Protection Program. Authorizes forgiveable loans for employers to cover workers’ salaries and other costs of keeping their businesses open. Discuss the details with clients and compare this program with the SBA loan program. “Do the math and see what is best for your clients,” Gillies said.
• Charitable Giving Initiative. The current adjusted gross income limits will be temporarily suspended for charitable deductions for cash gifts. “This is an unprecedented opportunity for you to discuss charitable giving and tax planning with your high-net-worth clients,” said Mark Massey of SMA Services.
• Retirement Savings. The CARES Act allows retirement plan participants to borrow up to $100,000 of their vested account balances, extends the time for repaying the loans and waives the penalty tax on early withdrawals. Clients who have been furloughed or laid off may be looking at their retirement savings as a way of obtaining cash to pay living expenses. Make sure clients know all their options before they withdraw money from retirement savings.
• Carryback Of Net Operating Losses. Clients can amend their tax returns going back to 2013 to take advantage of this tax provision.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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