Here is the latest guidance about RMD distributions in 2020: news, plus a few questions and answers.

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To our clients and friends:

We remain hopeful that you and everyone close to you are safe and healthy. March feels like a lifetime ago but we wanted to update you on the CARES Act that was passed March 27, 2020 specifically the topic of Required Minimum Distributions (RMDs).

As you may know, the CARES Act waived all RMD obligations for 2020. For those of you that turned 70.5 in 2019 and did not take your first distribution then, you would normally need to take both your 2019 and 2020 distributions now. The new guidance says you can skip both distributions in 2020. If you were 70.5 before 2019 you can skip up to your entire 2020 RMD.

A question we fielded when the Act passed was “What if I took my RMD in 2020 and was past the 60-day window to reverse it?” The update released this week now allows you to reverse any 2020 RMD by August 31, 2020. The IRS extended the 60-day rollover period for any RMDs already taken this year to Aug 31 so that taxpayers have time to take advantage of this opportunity.

We often advise clients to use their RMDs to pay their income tax. If you withheld all or part of your federal tax for 2020 from an RMD you already took, you can use other funds to replace the withholding when you put the RMD back into your deferred account. You will then have a credit on your 2020 tax return. Please talk to us about how that affects your tax plan for the rest of the year!

What do you need to do if you took your RMD – contact us and your financial advisor. Together we can determine if it makes sense to return your RMD or let it be part of your 2020 income.

We are committed to keeping you informed of tax law changes. If you have any questions, please reach out to a member of our team.

We appreciate your trust,
All of us at Werner & Company CPAs, PC

Congress approved sweeping changes to PPP. Here are the details. The bill now heads to President Trump for his signature.

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To our clients and friends:

Thank you for staying with us as we try to navigate the rapidly shifting rules of the SBA’s PPP loan and forgiveness program. We all hope you are safe and healthy.

On June 3, 2020 the Senate unanimously approved a bill to loosen restrictions for PPP loan forgiveness. This bill is identical to the one that passed the House on May 28, 2020. President Trump will likely sign it into law perhaps as early as today.

A summary of what the bill has to offer:

• Loan recipients now have longer to repay NON-forgiven proceeds. The payback period is now 5 years instead of 2. Lenders and borrowers are free to renegotiate the terms of existing PPP loans to match the 5-year payback.
• The “covered period” may total 24 weeks. When your loan funded you had 8 weeks to spend the proceeds – that is now or until December 31, 2020, whichever comes earlier. Borrowers can opt to maintain the original 8-week period.
• More can be spent on non-payroll costs. The new bill allows borrowers to use 40% (instead of 25%) on non-payroll items. Please note, if you fail to use 60% of proceeds on payroll costs NONE of the loan will be forgiven.
• You may now rehire workers and restore FTEs any time before December 31, 2020 instead of June 30, 2020. You will want to restore your FTE or hourly wage earners to February 15, 2020 levels prior to the end of 2020.
• You can achieve full forgiveness even if the workforce is not fully restored due to: a) businesses remaining partially or fully closed through the end of the year; b) eligible workers rejecting good faith offers to return; and c) COVID-19 compliance restrictions or business operation restrictions preventing achieving February 2020 levels.
• PPP recipients may delay paying their portion of social security and Medicare payroll taxes. Those taxes can now be deferred, 50% until the end of 2021 and 50% until end of 2022. The law allows PPP recipients to participate in the deferral, which was previously either/or.

Undoubtedly, our clients have many unanswered questions:

• The covered period was extended to 24 weeks, did the limit of cash compensation per employee increase as well?
• Same with owner-employees – currently limited to 8/52 of 2019 compensation levels, capped at $100k. Will compensation level increase here as well?
• May sole proprietors (Sch C) continue to pay themselves 16 more weeks? Self-employed taxpayers should achieve full forgiveness in under 24 weeks, if allowed. Presently they are still limited to 8/52 of 2019 net profit.
• Can borrowers file forgiveness applications prior to the 24-week covered period ending?

We’re actively monitoring the situation and as more information becomes available, we will update you. We expect the SBA to release FAQs to help with unanswered questions soon. Keep an eye out on our social media channels and your inbox for future webinars on the forgiveness application and the changes summarized in this email.

We appreciate your support!
All of us at Werner & Company, CPAs, PC.

Proper bookkeeping for the Paycheck Protection Program.

Download our up-to-date PPP Estimated Loan Forgiveness Worksheet spreadsheet to track all the necessary PPP expense information.

Please see 9-14-20 post to download the most recent version.

We have updated the Paycheck Protection Program Powerpoint file presentation again.

Please download the most recent version here: Paycheck Protection Program NEW 5-18-20

Here is another opportunity to learn the best practices for Payroll Protect Program documentation. Save your spot. Register now.

Count on Werner & Co. CPAs to keep you up to date through these Zoom meeting presentations.

Register in advance for the webinar presentation by clicking the link. After registering, you will receive a confirmation email with further instructions to join the meeting.

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PPP documentation best practices
May 18, 2020 Monday 1:00 PM Eastern Time (US and Canada)
https://zoom.us/meeting/register/tJwldeGgpz4pGt2S26kr6RwlQul_pStUv0Dy
After registering, you will receive a confirmation email with instructions to join this meeting.