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Thanks very much to @Bill Presson for bringing this matter to everybody's attention recently (DOL says we should not include participant names and other "Personal Identifiable Information (PII)" on the Schedule 8955-SAA, for example) -- here's a link to an article by Nevin Adams with details: https://www.asppa-net.org/news/dol-stop-including-pii-form-5500-filings

It's reasonable to explicitly follow the instructions on any form that is submitted to any government agency. The instructions right now don't limit the amount of contribution. But the instructions might change, the client needs to understand this. We don't write the instructions. Yes I agree that if there is any question about when/whether or not to make a contribution it is best to wait until close to the end of the PPP period.

A TPA really shouldn't discuss much of this with them, but instead refer them to legal counsel. In addition to qualification issues all the improperly excluded employees have possible claims against the plan, plan sponsor and fiduciaries. And there are substantial civil penalties in ERISA as well as criminal penalties for some things. The sponsor needs to understand all of this and they need to do so under the protection of attorney-client privilege.

If its a question of "I have no other qualifying expenses left", I agree. The only drawback in that case is cashflow. If its a decision between funding contributions not specifically related to the 56 day period and another expense that qualifies for forgiveness, it is a very different situation. This should be a last resort, not a decision between expense A and Expense B. The vast majority of practitioners should refer this to the client's tax advisor, and should not be handing out advice on PPP loans. This is especially true if you are picking up your own knowledge on the subject from other people's abstracts, even when authored the legendary panda himself

First, they need to get to 100%; 75% is just the MINIMUM needed on compensation to get no penalty. If you get to 100% on compensation without worrying about the ancillaries (rent, utilities), then that is optimal. If you are subject to penalty for not hitting all the targets (and don't forget about the FTE and reduction in comp tests), then yes, what you do get is forgiven and the rest just continues as a loan with a 2 year repayment and a 1% interest rate. Not such a bad deal also.

You are missing nothing.

???

If they contribute it to the plan (and then the plan pays it), it will count. If they pay it directly from the business, it will not. If it is automatically taken out of the account, it is not even an issue for discussion since there was no payment from the business.

Their plan does not meet qualification requirements; do they really want to bring it into compliance? I'm guessing (based on their past behavior) that they do not. I would tell them to hire a good ERISA attorney to advise them because they have civil liability to those folks who should have been included but were not. I would not touch this. They deserve everything they get! I have no sympathy for these jerks. And I wonder about the admin firm that handled the plan for over 10 years???? How did they not see these issues? And what about top heavy? And was it suppose to be a safe harbor plans? And and and......

CRDs are temporary, so no, you would not want to generally amend distribution timing unless you wanted to keep it that way. Just amend for CRDs by 2022 deadline, but be sure to do so in conformity with how the plan was administered, whether to the fullest extent of the law or on some other restricted basis.