The PPP rules—they keep a-changin’. The owner-employee rules now apply to S and C corporation owners who have a 5 percent or greater ownership interest. No attribution rules apply for purposes of the 5 percent rule.

Are retirement benefits included in PPP?

PPP loans will be fully forgiven when used for certain expenses, including payroll costs. Among other things, under Section 1102, payroll costs include “payments of any retirement benefits.”

What is an owner-employee for PPP forgiveness?

The employee cash compensation of a C corporation owner-employee, defined as an owner who is also an employee (including when the owner is the only employee), is eligible for loan forgiveness up to the amount of 2.5/12 of his or her 2019 or 2020 employee cash compensation, with cash compensation defined as it is for …

Can owner salary be included in PPP?

As an owner of a corporation, this should only be the amount you have paid yourself by running payroll. If you’ve been running payroll manually yourself or with the help of a CPA, so long as you have been remitting payroll taxes, you can use those salaries in your calculation to apply for the PPP.

Do distributions count for PPP forgiveness?

Owner distributions do not count toward forgiveness. The amount eligible for forgiveness is 8/52 of the amount on box 14A if using an 8-week covered period or 2.5/12 if using a 24-week covered period.

What are the limits for owner employee PPP?

Owner-employee: Payroll costs related to compensation during the eight-week period are capped at 8/52 of 2019 total compensation ( i.e., cash compensation and benefits). This amount includes employer contributions for retirement and healthcare, but incorporates a limitation based on 2019 total compensation.

When do payroll costs qualify for a PPP loan?

“If a borrower has an insured group health plan, insurance premiums paid or incurred during the Covered Period or Alternative Payroll Covered Period qualify as ‘payroll costs,’ as long as the premiums are paid during the applicable period or by the next premium due date after the end of the applicable period,” the FAQ says.

Where does eligible compensation go on PPP form 3508?

The eligible non-cash compensation payments should be included on lines 7 and 8 of PPP Schedule A of the Loan Forgiveness Application (SBA Form 3508), for borrowers using that form, and do not count toward the $20,833 cap per individual.

Why are retirement benefits included in a PPP plan?

The inclusion of the retirement benefit language specifically in the PPP has generated many questions by CPAs and legal professionals. But more importantly, business owners who need the PPP to pay their bills need clear answers so they can obtain funding. The non-eligible payroll costs are typically not that subjective.