The Tax Reform Act of 1986 established the ESOP diversification rules under IRC Section 401(a)(28) for qualified participants during the qualified election period. ESOP diversification can be satisfied by a distribution, a transfer to another qualified plan, or offering three or more investment options in the ESOP (certain requirements apply).
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.
Have you distributed your preliminary ESOP Diversification forms yet?
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