LGT's Profit Sense

As we roll through the 5^th week of Dallas County’s shelter-in-place order, the coronavirus (COVID-19) continues to wreak havoc across the nation. It is apparent in these past few days that not everyone agrees with the restrictive action taken to prevent the spread of the virus, and the number of infected individuals has persisted.

The World Health Organization declared the coronavirus (COVID-19) outbreak a pandemic on March 11^th, 2020, just over 37 days ago. As most investors are aware, the stock market reached a peak before the pandemic declaration, around February 19^th, 2020. Ever since then we have witnessed volatility in the broad markets that most have never experienced, forcing even the most intelligent money managers to scramble for answers.

Cash is king, so keep it safe

The past few months have brought to light some unprecedented changes in everyday life, and with those changes have come a heightened focus on health and safety. Physical health can be protected by safe distancing, washing hands, and adhering to CDC guidelines. But protecting your financial health is not always so straightforward. LGT Financial Advisors has a simple solution that allows you the flexibility for over $2.5 million of cash deposit insurance coverage through a deposit sweep program, and purchasing brokered Certificates of Deposit (CDs).

This article was co-authored by Collin Kanelakos, Partner, Assurance Services.

So, you’ve submitted your SBA Paycheck Protection Program (PPP) application and you might have even received your loan proceeds, but important work still remains. It is critical for you to closely manage and account for your PPP loan proceeds, not just for cash flow purposes but for accounting purposes in order to apply for your PPP loan forgiveness. The amount of documentation you will ultimately need for the forgiveness component of this loan will be substantial, so get your process in place now to shorten the lag of this ultimate forgiveness.

We are now 79 days removed from January 22^nd 2020, a date that marks the first reported coronavirus (COVID-19) case in the United States. Since then over 462,000 confirmed cases of the virus have been reported along with almost 25,500 recoveries and over 16,500 deaths, leaving the death rate of COVID-19 for the US at roughly 3.5%. As stated in earlier updates, the coronavirus poses a unique issue due to the number of days between infection and actually showing symptoms.

To help individuals stay afloat during this time of economic uncertainty, the government will send up to $1,200 payments to eligible taxpayers and $2,400 for married couples filing joints returns. An additional $500 additional payment will be sent to taxpayers for each qualifying child dependent under age 17 (using the qualification rules under the Child Tax Credit).

Employee retention credit for employers

Eligible employers can qualify for a refundable credit against, generally, the employer’s 6.2% portion of the Social Security (OASDI) payroll tax (or against the Railroad Retirement tax) for 50% of certain wages (below) paid to employees during the COVID-19 crisis.

This past week brought to light a handful of historic events that continue to unfold as the coronavirus (COVID-19) wreaks havoc on our livelihood. It is clear that we are living through a phase of life that will be written about for years to come, and we are all hopeful for positive steps back to a normal society. The president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the Act) as the third and most sweeping package aimed to provide financial support for Americans affected by the coronavirus. The Act itself is historic as the largest monetary stimulus package to pass all three branches of government, making $2.3 trillion available to those suffering from the pandemic. With the large amount of financial relief comes a long list of rule modifications intended to ease the pressure that individuals, businesses, and state and local governments are continuing to face. The Act addresses important needs, but it is by no means a fix-all for our battered economy. The market continues to exude drastic volatility, unemployment claims continue to skyrocket, and everyone is still trying to cope with new norms like social distancing.

Generally, individuals are required by law to take an annual withdrawal from their IRA, Simple IRA, SEP IRA, or other retirement plan vehicles such as a 401K plan once they reach age 72 (or 70 1/2 before 2020).  They have until April 1st of the following year after reaching the required RMD age to take their first RMD payment.  Every year thereafter, they must take the RMD by December 31st.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act contains immediate payroll tax relief to certain employers. The employee retention credit cannot be utilized by an employer who receives a section 7(a) SBA loan or CARES loan.