Larry Starr

We are in 100% agreement. My speech includes "wait until we are six weeks into your 8 weeks and let's see if we get any additional guidance. And if we don't have any, you will have to make the decision about pulling the trigger or not." And if you go back and re-read my postings in THIS THREAD, you will find that I said exactly that. Did you miss that?

Well said; exactly what went into my earlier concise comment: "I would not touch this. "

Precisely exact summary of what we are doing. Nice job there old friend!

Well, if you get your forgiveness application in on the day after the 8 weeks ends, our belief (which could be wrong of course) is that they will once again apply the rules in effect at the time of submission (we actually think that's why it won't change, because they will "have to" apply the rules in effect at time of application for funds, but that's another argument) and your retirement money will count even if they write a new rule after. In addition, it is the BANKS that will be "auditing" (or rather, approving the application for forgiveness) and they just can't determine how much retirement money, contributed during the 8 weeks, is applicable to each year. Therefore, that's another reason why the rule won't change; the banks would not be able to administer it. The agencies have been given marching orders from the White House to NOT make things difficult. That's a real important restriction on them. The IRS won't be auditing anything; this is not their battle. And if you have "more eligible ways" (whatever that means) to garner forgiveness, by all means do that first. But the only thing available is salaries, and I'm going to assume you have already maximized that as best as you can. I understand your reserved position; I just think it will disadvantage clients more than advantage them.

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.

Austin, I have no problem with other people taking positions different from mine; my friends will tell you that I am often a contrarian and I accept that readily (of course, I am almost always right! No brag: just fact; LS for Walter Brennan ?). I too would LOVE them to come out and say "Larry was right all along". They might or might not. But if clients ignore my opinion and don't qualify for 100% forgiveness because of a conservative approach, then who will be blamed? And if you didn't give your clients that information and let them make their own decision, I think there is a possible problem there. The additional problem is that there is a very rigid time restriction and for the earliest recipients of PPP money, that runs out in the next few days.

It certainly isn't clear what's going on from your incomplete data. I bolded a sentence above. I'm going to take it that this $400,000 is a LOAN to the company (from the bank? from PPP? doesn't matter actually!). If it's a loan to the company, it does not affect the value of the company. The assets go up by $400k, but so do the liabilities. Net effect is zero. So I'm going to ignore the rest of your posting because if this is correct, the rest of it is just not applicable. If you want to provide more, different details, maybe you will get a different answer.

Well said!

The downside of the russian's coming is terrible too! But I ain't gonna worry about it! Boy, all you can see is negatives; all I see is positives. We don't know FOR SURE anything really ("does anyone really know what time it is? does anyone really care?). I allow (in this environment) for ANYTHING, including getting a notice from SBA saying "never mind; just keep all the money" but that ain't gonna happen either. For my clients there is no big downside. We are talking about funding the 2019 contribution which they have already committed to and on which the 2019 admin has been completed and benefit statements prepared and distributed (we do our work on the accrual basis). No downside to putting the money into the plan within the 8 weeks except for a possible effect on cash flow. And if they want to put in some of the 2020, again no downside since they are going to do it anyway. I am not telling them to put money in that they aren't sure they want to put in. There usually is NO OTHER source of funds for forgiveness; remember, this stuff shows up in the compensation calculation, unlike rent, utilities, etc. The pay to the employees is already established; this is on top to get to 75% or more (even 100%). Every client I talk to understands that we are using what we know at this point and that it could be different since they keep giving us new stuff. I do not expect anything they give us from now on will "take away" anything we already have since so many people have already depended on those rules. Nobody will fire us for giving them the best we can figure at this point; and I practice what I preach. We are doing exactly the same thing. I may have better relationships with our clients since the issues you are concerned about are not even an inkling of an issue in my mind. Only time will tell if I'm correct on all this. We HAD to put the reservations in the article, because I am not talking directly to those individuals to spend a couple of minutes going into greater depth of where we are now and what possible risks there might be (though at this point I am still leaving out my concern about the russians!). Do I have reservations: let me state this clearly - NO.

???

Whop: PLEASE! If you are going to post and ask for assistance, please take the time to go back and read what you wrote and please put it in english so that we can understand. It is very distracting to try to read what you wrote above. Punctuation and spelling matter (at least, somewhat: we understand typos).

I'm concerned that the russians might launch a nuclear attack on us (about as much as I am "concerned" about a more limited interpretation provided later). The downside is not so bad; they've contributed to the plan what they were going to contribute anyway.

Really? Will they accept referrals???? That is, before they go bankrupt! ?

By definition, that is NOT a balance forward plan; you specifically say it would be updated daily. What are you really trying to ask? What you are describing IS an individually directed plan with participant selection of investments. Selecting from different offered investment options IS participants directing their investments. Your premise regarding balance forward makes not sense. Any platform should be able to do this; I of course would not think of recommending such an option but that's a whole other discussion and not for this thread.

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.

It is not, but I'll take any bet that it will be. I have absolutely no doubt. Both house and senate, democrat and republican have said that IRS analysis is NOT what congress intended and needs to be fixed. If not by IRS reinterpreting, then by congressional action. And I'm guess before the end of next week.

An S corporation owner is a shareholder employee, not an owner employee. We see no justification for any other tortured interpretation. If they meant owners of S corps, I can guarantee they would have said S corps SOMEWHERE. They did not. And the only statutory definition is as posted by my alter ego!

It is rare that Derrin and I don't agree, but it does happen. When that happens, they usually they shoot off fireworks and advertise it in a full page ad in the New York Times.... but I digress..... I tell clients that the guidance to date clearly allows for funding their retirement plans and that WHATEVER is contributed in the 8 weeks, without limitation, will count toward their compensation side of the reimbursement calculation. I also tell people that if they are stretching to make this contribution, wait until about 6 weeks into their 8 weeks and let's see if we get more guidance. And I say it's always possible that they can change their mind, but I am highly doubtful that will happen (but I could be surprised!).

No, and I frankly don't think it accomplishes anything. If they made a mistake with the PPP amount, they will have to pay it back. No opinion letter is going to change that. And no one is going to jail. The real question is what do they think such a letter will do for them? I suggest it won't do anything for them but drain their bank account.

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......

And, make sure you are dealing with a really competent ERISA attorney or consulting firm!

Luke, I just don't see this dying after ASD as an issue. Do you mean AFTER a J&S annuity payout has actually started? Well, I can tell you that while we have J&S as the default, effectively, no one has EVER taken an annuity (we have had two annuities purchased by participants in almost 37 years). When a participant dies, if they have a beneficiary designation that says 1/2 goes to my kids, then they will still get their 1/2 and the widow can take her 1/2 as a lump sum (or buy an annuity with it). Does that clarify?

Here's the white paper that we wrote Sat/Sun/Mon after the new forgiveness form came out. Use that for your source; you won't find anything better at this point. LISIGassmanKetronStarrCameronPDF5_18_2020.pdf

Yes, I remember seeing that language and I always felt that it actually didn't do what it said it did. If H owns a corporation and it is in a CG with spouse W, there is no way that the adopting of a plan by H's business can automatically mean that W's corporation has any responsibility for the benefits under that plan, even though that plan says W's company is automatically an adopter. Unless W's company takes a legal action to adopt a plan for W's employees,W doesn't have a plan no matter what "his" plan says.

See my comments in the body of the posting above. Is there anything I got wrong?