The One-Stop ESOP Blog

What are Required Minimum Distributions?

Most 401(k) plan sponsors have become accustomed to performing a due diligence review of plan expenses every one to five years. This review is done primarily because ERISA provides that qualified retirement plans are solely for the benefit of the participants and that plan expenses must be reasonable. The review also helps ensure that fees as well as the supplementary tools provided are competitive with the marketplace.

The annual employee stock ownership plan (ESOP) allocation process involves many different parties and many different moving parts. In order to complete the ESOP allocation in a timely manner, it is important to effectively manage the allocation process. One of the easiest and most effective ways to manage the ESOP allocation process is by preparing and maintaining an allocation timeline.

We are already into the second week of December and 2010 will be here before we know it. Many of you are preparing for the end of the year and the start of a new year by going through a planning process:

An ESOP is generally funded by two sources, contributions and dividends. Dividends in an S corporation are generally referred to as S corporation distributions of earnings (S distributions). For purposes of this installment, dividends will refer to both dividends and S distributions unless stated otherwise, while S distributions will not include C corporation dividends. Here are some things to consider when determining your dividends, if any, for the year: