The Coronavirus Aid, Relief and Economic Security (CARES) Act gave a number of protections to consumers whose health or livelihood has been impaired because of the COVID-19 pandemic. Many of those provisions are expiring soon, as are other relief measures, such as the eviction protection for renters ordered by the Centers for Disease Control and Prevention (CDC).
The expiration of benefits for renters, homeowners and the unemployed could have an enormous impact on their lives and the economy as a whole. According to the U.S. Census Bureau, even with pandemic relief, nearly 83 million adults found it difficult to cover normal expenses such as food, rent or mortgage payments in November. Children and minorities have been particularly hit hard, according to the Center on Budget and Policy Priorities (CBPP), a nonprofit think tank. Expiration of pandemic relief provisions would worsen an already difficult situation, the CBPP says.
These pandemic-related benefits could be renewed or revised by Congress or, in some cases, by presidential directive. For example, Congress currently is mulling several proposals for additional relief for the unemployed. But it is still uncertain whether federal lawmakers will provide additional economic aid and — if so — when it might arrive.
Here are the current COVID-19 relief measures and when they expire.
Penalty-free withdrawals from retirement accounts
End date: Dec. 30
Savers who have been impacted by the coronavirus pandemic, either by medical costs or lost wages, can withdraw up to $100,000 per person from their tax-deferred retirement savings, such as 401(k) plans and individual retirement accounts (IRAs) in 2020. If you’re older than 59 1/2, you can already do this, but those who are younger than 59 1/2 won’t be charged the 10 percent early withdrawal penalty in 2020.
You’ll owe income taxes on your withdrawal from a tax-deferred retirement account, but you’ll have three years to pay the taxes on the amount you took out. (You can also repay the withdrawals over three years and avoid paying taxes on the withdrawal.) You should check with your state unemployment department, however, if the withdrawal from your retirement plan will affect your eligibility for unemployment benefits.
If you’re required to make minimum distributions from 401(k) and traditional IRAs in 2020, you may skip them this year. If you’ve already taken a required minimum distribution, you can roll it back into your retirement plan.
If you want to take a loan from a 401(k) plan and your company plan allows it, you may take one up to $100,000, or 100 percent of your vested account balances — up from $50,000 or 50 percent of vested balances before the pandemic aid for 2020 was created. You’ll have to repay the loans on whatever terms your employer asks, and if you lose your job before you repay the loan, you’ll owe taxes on the outstanding loan amount.
For the latest coronavirus news and advice go to AARP.org/coronavirus.
End date: Jan. 31, 2021
In March, interest rates on student loans administered by the federal government were set to zero and borrowers were granted forbearance on payments until Dec. 31. (Forbearance means that there is no penalty for not paying during a set period, but borrowers still owe the full amount of the loan.) On Dec. 4, the Department of Education pushed that deadline to Jan. 31, 2021.
The zero percent loan rate applies to federal student loans owned by the Department of Education. Some student loans are owned by commercial borrowers or the schools themselves, and those loans are not covered by this administrative forbearance. You can find a list of student loan servicers for loans owned by the Department of Education online. The servicer is the company you send your monthly payment to. If you do not know the name of your servicer or how to reach it, contact the Department of Education through StudentAid.gov, or call 800-433-3243.
End date: Dec. 31
The CARES Act extended unemployment benefits to private contractors and others who normally might not be eligible for state unemployment compensation. The Pandemic Unemployment Assistance (PUA) program provided for up to 39 weeks of benefits, starting with weeks of unemployment beginning on or after Jan. 27 of 2020.
The CARES Act also provided 13 additional weeks of unemployment benefits for those covered by state unemployment assistance, known as the Pandemic Emergency Unemployment Compensation (PEUC) program. After those 13 weeks, workers could apply for PUA benefits.
Both pandemic programs will end the week of Dec. 26, although it’s possible that one of several competing bills in Congress could extend unemployment benefits further. At this writing, however, Congress has not done so.
Federal eviction moratorium
End date: Dec. 31
The CDC ordered a moratorium on evictions from rental properties until Dec. 31. The order covers those who are unable to pay rent because of coronavirus-related problems. Tenants can still be evicted for other violations of their rental agreement, such as damage to the property. And the accumulated amount of rent a tenant owes will become due in full once the eviction moratorium is lifted.
Because of ongoing litigation, the CDC wouldn’t comment on whether the order would be extended, leaving open the possibility of millions of tenants being evicted in January and February, when the pandemic is expected to still be raging. Some states and cities enacted local eviction moratoriums earlier in 2020, but some of those have already expired. It’s unclear whether local governments might intervene once more.
Mortgage foreclosure moratorium
End date: Dec. 31
The CARES Act forbids lenders or loan servicers from foreclosing on federally backed mortgages until after Dec. 31. This includes most mortgages, including FHA, VA, USDA, Fannie Mae and Freddie Mac mortgage loans. You can check online to see if one of the mortgage giants owns your mortgage:
These lenders must extend forbearance on the loans, so you’ll still owe missed payments but you don’t have to repay them in a lump sum. Talk to your lender or loan servicer about a payment plan for missed payments.
You still have time to ask for a 180-day forbearance from your mortgage, and lenders do not have to demand proof of hardship. Unless Congress acts, however, the window for requesting forbearance ends on Dec. 31.