one stop esop blog

Summary of ERISA Benefit Legislation

Posted by Aaron Juckett on Thu, Jan 14, 2016

The Employee Retirement Income Security Act (ERISA) was signed into law on September 2, 1974 by President Gerald Ford.  Since then, Congress has passed over 100 major pieces of employee benefit legislation since ERISA was signed.  Chronological Summary of Major Post-ERISA Benefit Legislation provides a summary of the major employee benefits legislation:

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Topics: legislation, Plan Document

Qualified Charitable Distributions (QCD)

Posted by Aaron Juckett on Tue, Jan 12, 2016

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) was signed into law on December 18, 2015.  One item covered under the law was the permanent extension of the option to take a qualified charitable distribution (QCD).  This option, first available in 2006, allows IRA participants to exclude up to $100,000 from gross income for donations paid directly to a qualified charity from their IRA.

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Topics: ESOP distributions, Employee Stock Ownership Plan (ESOP), Qualified Charitable Distributions

The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act)

Posted by Aaron Juckett on Thu, Jan 07, 2016

President Signs Extenders And Omnibus Acts, Impacting Broad Range Of Provisions provides a summary of The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that was signed into law on December 18, 2015.  The legislation permanently extended provisions that previously had to rely on “extenders” to apply retroactively to the past year and also extended other provisions.  Here are some relevant highlights:

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Topics: legislation, Employee Stock Ownership Plan (ESOP)

2015 ESOP Benefit Payment Government Filings (IRS Forms 1099-R, 1096, 945)

Posted by Aaron Juckett on Tue, Jan 05, 2016

If you paid any ESOP or other qualified retirement plan distribution of $10 or more last year you will have to prepare and file some government forms: Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

The 2015 Instructions for Forms 1099-R and 5498 provides guidance on how to prepare and file the 2015 forms.  Prior instructions can be found here.

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Topics: Compliance, ESOP distributions, ESOP Administration

2015 ESOP Required Minimum Distributions (RMDs)

Posted by Aaron Juckett on Tue, Dec 29, 2015

ESOPs and other qualified retirement plans require that plan participants begin taking a distribution of their retirement plan benefits after they reach a certain age. This distribution, also known as an IRS Required Minimum Distribution (RMD), is required for plan participants annually starting with the year that the participant reaches 70 ½, or if later, the year in which the participant retires. [If the account is an IRA or the account owner is a 5% owner sponsoring the plan, the RMD must begin upon attainment of 70 ½ .]

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Topics: ESOP distributions, required minimum distribution

2016 ESOP and Pension Plan Limits

Posted by Aaron Juckett on Thu, Oct 22, 2015

The IRS has announced the 2016 pension plan limits, including the following:

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Topics: rules and regulations, Employee Stock Ownership Plan (ESOP)

S. 1212: Promotion and Expansion of Private Employee Ownership Act of 2015

Posted by Aaron Juckett on Mon, Jun 01, 2015

S. 1212: Promotion and Expansion of Private Employee Ownership Act of 2015 was introduced on May 6, 2015, by Sen. Benjamin Cardin [D-MD], and is co-sponsored by Ayotte, Kelly [R-NH], Blunt, Roy [R-MO], Collins, Susan [R-ME], Crapo, Michael [R-ID], Franken, Alan “Al” [D-MN], Heitkamp, Heidi [D-ND], Klobuchar, Amy [D-MN], Leahy, Patrick [D-VT], Risch, James [R-ID], Roberts, Pat [R-KS], Stabenow, Debbie [D-MI], Thune, John [R-SD], and Whitehouse, Sheldon [D-RI]. Baldwin, Tammy [D-WI], Sanders, Bernard “Bernie” [I-VT], King, Angus [I-ME], and Kirk, Mark [R-IL] have also co-sponsored the legislation.  It has been referred to the Senate Finance committee.

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Topics: legislation, In the News, Employee Plans News

H.R. 2096: Promotion and Expansion of Private Employee Ownership Act of 2015

Posted by Aaron Juckett on Wed, May 27, 2015

H.R. 2096: Promotion and Expansion of Private Employee Ownership Act of 2015 was introduced on April 29, 2015, by Rep. Reichert [R-WA], and was originally co-sponsored by Blumenauer, Earl [D-OR]Boustany, Charles [R-LA], Kind, Ron [D-WI]Neal, Richard [D-MA]Pascrell, Bill [D-NJ]Paulsen, Erik [R-MN], and Tiberi, Patrick “Pat” [R-OH].  As of May 21, 8 additional co-sponsors have signed on to the legislation: Ashford, Brad [D-NE2], Dold, Bob [R-IL10], Moore, Gwen [D-WI4], Conyers, John [D-MI13], Davis, Rodney [R-IL13], Goodlatte, Bob [R-VA6], Marchant, Kenny [R-TX24], and Smith, Jason [R-MO8].  It has been referred to the House Education and the Workforce Committee, the House Small Business Committee, and the House Ways and Means Committee.

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Topics: legislation, In the News, Employee Plans News

ESOP Compensation for ESOP Allocations

Posted by Aaron Juckett on Tue, Mar 31, 2015

As mentioned in our prior article on ESOP Compensation for Compliance and Nondiscrimination Testing, one of the most important items that a plan sponsor will need to gather for ESOP administration purposes is plan compensation.  The legal compensation requirements are defined by the Internal Revenue Code and your specific plan requirements are defined in your plan document. 

Compensation is defined for allocating ESOP and other qualified retirement plan contributions, determining deduction limits, and nondiscrimination testing.  Depending on your plan design, there may be differing definitions for each plan component/money source (e.g. ESOP, safe harbor match, discretionary profit sharing, salary deferrals, etc.).

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Topics: Compliance, ESOP Administration

ESOP Compensation for Compliance and Nondiscrimination Testing

Posted by Aaron Juckett on Wed, Mar 25, 2015

One of the most important items that a plan sponsor will need to gather for ESOP administration purposes is plan compensation.  The legal compensation requirements are defined by the Internal Revenue Code and your specific plan requirements are defined in your plan document. 

Compensation is defined for allocating ESOP and other qualified retirement plan contributions, determining deduction limits, and nondiscrimination testing.  Depending on your plan design, there may be differing definitions for each plan component/money source (e.g. ESOP, safe harbor match, discretionary profit sharing, salary deferrals, etc.).

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Topics: Compliance, ESOP Administration, safe harbor contribution

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CPA, CPC, QPA, QKA 
ESOP Partners LLC 
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2016 IRS Pension Plan Limits

401(k) Deferral Limit - $18,000

Annual Additions Limit - $53,000

Maximum Compensation Limit - $265,000

Catch-Up Contribution Limit - $6,000

Highly Compensated Employee - $120,000

ESOP 5-Year Distribution Threshold - $1,070,000

ESOP Additional Year Threshold - $210,000

2016 Pension Plan Limits

2015 Pension Plan Limits

1989 - 2016 Plan Limits