Paycheck Protection Program (2019 Contributions?)

[Gilmore]

I saw the great discussion on the PPP earlier in the week, which pertaining mainly to prefunding 2020 contributions.

Are 2019 contributions eligible for consideration in the PPP.  For example, employer was planning to fund a 2019 profit sharing contribution by their 2019 extended tax filing deadline, and makes the deposit during the 8-week window?

Thank you.

[Bird]

I don't think this is known for sure.  I have some accountants that are trying to sync up retirement plan contributions very carefully "for" the 8 week payroll period, and others that are ok with funding 2019 contributions, and some pre-funding any/all 2020 contributions.

[Bill Presson]

Not sure there are exact guidelines. But during a webinar that Brian Graff was doing for us last week, I asked him this specific question. He said that the "intent" of the legislation (based on his discussions with the drafters) is that the amounts would be those attributable to that 8 week window and associated with those payrolls.

If employers do differently than that, their mileage may vary.

WCP

[Gilmore]

Thank you Bill and Bird.  Bill your comment seems in line with the ASPPA article that I believe was prepared by Marty Pippin?

I'm probably off base, but my thinking was if the intent was to provide employers assistance during an anticipated stretch of time in which the government put many out of business, then it makes more sense that 2019 receivables could be included as that was cash intended to be outlayed in 2020 albeit maybe or maybe not during that 8 week period, but cash that was needed nonetheless.

 

[Bird]

For what it's worth one of the accounting firms that was taking more of an "anything goes" approach is now saying contributions should be for the 8 week period.  Either that or I misunderstood where they were coming from originally.  I agree that the intent was almost certainly to cover contributions "for" the 8 week period.

[justatester]

Along this line...Here is what the client has said.

The received extra funds from a Small Business Association from a business loan and they would like to put the extra money into the Retirement Plan.  They have to use the funds within 8 weeks (by June 16, 2020). 

Is this permissible?  would it be a 2020 or 2019 contribution?

 

[duckthing]

At the risk of sounding like a broken record: I don't think anybody knows. There's just no guidance on this yet, at least not that I've seen.