PPP Money

Client has made his 2020 profit sharing and safe harbor contribution, just received some PPP money and wants to know if he can reimburse the PC.

I know he can use PPP money to make the contribution, but not sure about reimbursements.

Who got the PPP money and who is reimbursing whom for what?  Maybe it's me but this is confusing.

Client received some PPP money recently, wants to know if he can use it to reimburse his PC for the employer portions of his SH 401K.

I seem to recall, he can use the PPP money for leg expenses.

54 minutes ago, thepensionmaven said:

Client received some PPP money recently, wants to know if he can use it to reimburse his PC for the employer portions of his SH 401K.

I seem to recall, he can use the PPP money for leg expenses.

Why would the "client" receive PPP money and not his PC?? Is the client also an employer? This is still confusing.

I have the same confusion as Bill and Bird...

Or are you just looking at it as a timing issue?  Client made $10,000 contribution in February and got $100,000 in PPP funds in March, can you count the $10,000 as a PPP funds spent on the retirement contributions?  Is that the question?

No, my client is the owner of a PC (S Corp) that sponsors a safe harbor 401K with profit sharing.  He has gotten conflicting answers as have I.

He is questioning the loan forgiveness provisions of PPP; he's selling his practice, wants to make the 2021 employer contributions now and wants to know 1) if he can reimburse the PC for the contribution from PPP funds and 2) are retirement plan contributions eligible for PPP forgiveness.

Some articles say this is permitted, others say it is not.

Of course, the account steels his client... "I'm not sure...check with your TPA."

Retirement plan contributions are includible in "payroll costs" under PPP forgiveness, need to follow all the PPP guidance from SBA and Treasury.

The "reimburse" comment makes no sense.  The PPP proceeds should have been paid to the PC, so the PC already has them.

Right, none of us adequately understand the situation.

1 hour ago, thepensionmaven said:

"I'm not sure...check with your TPA."

Retirement plan contributions are eligible for PPP forgiveness, but this is 100% a question for his CPA.  If CPA cant answer or is passing the buck, it is time for a new CPA.

I think his question now is, can the employer reimburse the PC with PPP money for the contribution.

We're talking in circles....

2 hours ago, thepensionmaven said:

I think his question now is, can the employer reimburse the PC with PPP money for the contribution.

None of us understand who is getting the PPP money, who is the PC, who is the employer, who is the plan sponsor and who is reimbursing whom for what. It just doesn't make any sense. Way to many players it seems.

Seems pretty straightforward to me.

Perhaps not explaining correctly.

Client is a PC, he has made his 2021 plan contribution already.

He just received his PPP money.

Can the employer (PC) recoup the amount the PC spent on the contribution with the PPP money.

We know the client can use PPP money to pay the contribution; the question is, can PPP money be used to reimburse the PC.

19 hours ago, thepensionmaven said:

the question is, can PPP money be used to reimburse the PC.

Again - the PC has the money.  The idea of reimbursing makes no sense when it already has the money.  I suspect you are asking: "Can the PC "count" PPP money it received after already making a contribution as going towards said contribution?"  Is that right?

Now, I see where you're going.

The client wants to know how much of this can be "forgiven".

There is no way to answer that here. He has to work thru the SBA worksheets with his other eligible payroll (and other) expenditures during the applicable period to figure out how much is eligible for forgiveness.  Pension contributions paid during the applicable period are includible as payroll costs eligible for forgiveness, subject to the overall compensation limits applicable to owners.