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.

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?

Audit Closing Agreement Program (Audit CAP)

Voluntary Correction Program (VCP)

The IRS implemented EPCRS (The Employee Plans Compliance Resolution System) as means for plan sponsors to take corrective action to avoid the tax consequences of plan disqualification.  One of the three components of EPCRS is the Voluntary Correction Program (VCP).  Under this program the plan sponsor, at any time before audit, may pay a limited fee and receive the Service's approval for correction of a qualified plan failure.

IRS Updates EPCRS (Employee Plans Compliance Resolution System)

EPCRS allows a plan sponsor to take corrective action to avoid the tax consequences of plan disqualification.  The IRS released Revenue Procedure 2013-12 on December 31, 2012, which modifies and supersedes Revenue Procedure 2008-50.  The procedure is generally effective April 1, 2013 and Plan sponsors may elect to apply provisions on or after December 31, 2012.

Excludable Employees in an ESOP

In a previous blog post on the eligibility requirements for an ESOP, I discussed the age and service requirements that can be written into a plan document to enter the ESOP.  It is quite common that plan documents will exclude the following individuals from participating in an ESOP, even though they’ve met the participation requirements allowed under IRC §410(a).

Handling QDROs in your ESOP

A domestic relations order (DRO) is a judgement, decree, or order that is made pursuant to state domestic relations law that relates to the provision of child support, alimony payments, or maritial property rights for the benefit of a spouse, former spouse, child, or other dependent of a participant.

Defining Disability in an ESOP

When an unforeseen event happens that disables a participant from continuing employment, the termination may provide additional ESOP benefits to the former employee.  Question is... do you know how your ESOP defines disability?

Do You Have a Missing ESOP Participant?

If it hasn’t happened to you already, you may have a future encounter with not being able to locate a former ESOP participant with a vested account balance.  This can especially occur when there is a delay in paying the distributions to the ESOP participants due to participants moving to a new address and not providing notice to the Plan Administrator.  When this happens, there are a couple of steps you should follow.

Keep Your ESOP On Track and On Time
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