How the $2 Trillion Stimulus Aims to Help You Beyond a One-Time Check

The Senate and White House have agreed to the terms of a $2 trillion stimulus bill designed to mitigate the economic damage caused by the coronavirus pandemic. While much of the bill is designed to help certain types of hard-hit businesses survive, such as airlines and movie theaters, hundreds of billions of dollars are intended to help everyday Americans.

It's not just one-time checks, either. While that's certainly a part of it, there are several other key provisions in the legislation that might make this difficult time a little easier on you. Here are five of the most important ways the stimulus bill could help the average American weather the coronavirus pandemic with as little financial distress as possible.

1. One-time checks
First and foremost, the stimulus bill includes one-time payments to most Americans. The payments in the Senate bill call for $1,200 per adult and $500 for each child under 17. So a family of four could receive as much as $3,400.

There are a few things to know. First, the payments are income restricted. Single taxpayers need to have adjusted gross income of $75,000 or lower to qualify for a full payment and could still get a partial payment with AGI up to $99,000. For married couples who file joint tax returns, the full benefit AGI limit and the phase-out limit are $150,000 and $198,000, respectively.

2. Enhanced unemployment benefits
Unemployment benefits are generally not great. Depending on what state you live in, the maximum unemployment benefit ranges from $235 to $795 per week. For most workers, the maximum doesn't come close to replacing their income.

The stimulus bill addresses this issue, adding up to $600 per week to each state's maximum. For example, if you live in New York, the standard maximum unemployment benefit is $450. For the next four months, New York's maximum unemployment benefit will be a weekly payment of $1,050.

The bill also adds as much as 13 weeks of extended unemployment benefits. Most states currently cap unemployment benefits at a maximum of 26 weeks, although some have different time limits.

Finally, the stimulus bill also provides unemployment benefits for certain groups who traditionally wouldn't qualify, such as independent contractors and self-employed individuals.

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3. Deferred student loan payments — with no interest
It was previously announced that the Department of Education would waive student loan interest for at least 60 days and would allow borrowers to suspend repayment without penalty.

Well, the stimulus bill takes this a step further. It suspends student loan payments altogether through Sept. 30 with no interest or penalty.

Of course, if you can afford to, it could be a smart idea to keep making your student loan payments anyway. After all, with 0% interest for the next six months, every dime you pay toward your loans goes toward the principal.

4. Retirement savings rule changes
The bill includes several changes that allows Americans to access their retirement savings more freely in they need the money.

  • First, savers can take a distribution of as much as $100,000 from an IRA, 401(k) or other retirement plan without penalty, if they face a coronavirus-related hardship.
  • 401(k) loans are currently capped at $50,000, but the bill doubles the maximum loan amount to $100,000.
  • If a retiree doesn't want to take a required minimum distribution, or RMD, from their retirement accounts in 2020, they can choose not to.

Although these rule changes will certainly help some struggling Americans, it's smart to exercise caution before taking money out of your retirement savings, and it's advisable to use this as a last resort.

5. Mortgage and eviction relief
The stimulus bill allows for anyone with a federally backed mortgage loan to receive a forbearance (a break from making their payments) of up to 60 days, with the option to extend for an additional four 30-day periods if necessary.

It also forbids any landlord who has a federally backed mortgage from evicting tenants for non-payment of rent for a 120-day period, and also exempts tenants from any penalties or fees that would ordinarily be assessed for late or unpaid rent.

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The business loans aren't just to help businesses
While it's not a direct benefit for individuals, it's important to mention that the $500 billion lending program to help save businesses isn't only to make sure those businesses survive. Sure, it's important to keep the airline industry and other affected business types operating, but consider that to receive the loans, businesses are agreeing to maintain at least 90% of their workforce through at least Sept. 30.

In other words, companies that get a rescue loan from the government cannot simply take the money and lay off their staff. So these loans are also likely to save thousands of jobs for Americans who would otherwise be at risk of unemployment.

As a final thought, keep in mind that this is a long and detailed bill and that this is still a very fluid situation. While the Senate has bipartisan support for the stimulus bill, there's no guarantee that these provisions won't change slightly as the bill makes its way through the House of Representatives. So keep an eye out for the latest developments as the situation progresses.

Read more from Matthew Frankel at TheMotleyFool.com

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