Kevin Rusch

Kevin Rusch

Have questions about this or another ESOP-related topic? Please contact us.

Recent Posts

Fiduciary Liability Insurance for ESOP Fiduciaries

Deductible Dividends Paid to an ESOP

In my prior blog post, I discussed the maximum contribution deductions limits for an ESOP.  ESOPs also have additional tax saving opportunities by providing deductions for dividends paid to an ESOP.

Computing Your Maximum ESOP Contribution

Employers are limited to the amount of contributions that can be contributed to their defined contribution plans, which includes ESOPs, and deducted on their corporate tax returns.  The deduction limit under IRC §404(a)(3) is 25% of the aggregate compensation of the plan participants and covers:

ESOP RMDs due April 1st

It won’t be long and April 1st will soon be upon us.  One requirement for ESOPs and other qualified retirements plans is to distribute Required Minimum Distributions (RMDs) to eligible plan participants.

Using Elapsed Time in an ESOP

In a previous post, I discussed the importance of tracking Hours of Service for purposes of performing the eligibility analysis to enter the ESOP, determine who has met the allocation requirements to share in the contributions for the plan year, and update and individual’s vested years of service.  An alternative approach to counting hours worked is using the elapsed time method of crediting service.  Using this method can be particularly beneficial to part-time workers that will not work 1,000 hours during a plan year.

ESOP Hours of Service

When you are preparing your annual plan year end census file for your ESOP Third Party Administrator (TPA), there is a very good probability you need to provide hours of service for each employee.  Hours of service are generally used to perform the eligibility analysis to enter the plan, determine who has met the allocation requirements to share in the contributions for the plan year, and update an individual’s vested years of service.

Issue Your Preliminary ESOP Diversification Forms by March 31st

As a Plan Sponsor of a mature ESOP with a December 31st plan year end, you need to be aware of the Internal Revenue Code's ESOP Diversification requirements that apply to your plan.

Reviewing Your ESOP Administration Timeline

Partial Plan Termination in an ESOP

A partial termination in an ESOP usually occurs when a group of participants is eliminated from the plan by involuntary termination of employment.  A partial termination occurs if the reduction in participants is participation is significant.  As stated in IRC 411(d)(3), if a partial termination has occurred, the ESOP participants affected by the partial termination are automatically 100% vested, regardless of their years of service.

Determining ESOP Employees’ Date of Participation

If you are a December 31st plan year end, you may have, or soon will be collecting your 2012 employee payroll information and computing new participants for the ESOP.  Your plan document defines the eligibility requirements for your plan, but do you know what entry dates are used in your plan?

Keep Your ESOP On Track and On Time
12 Benefits of Incorporating an ESOP in your Business Exit Strategy

Recent Posts