The One-Stop ESOP Blog

The end of the year is approaching.  Here is a list of items to make sure you have addressed before the end of the year.

The Cycle C2 submission deadline for an ESOP Determination Letter is January 31, 2014.  Here is a quick review of the process.

Congress has passed over 100 major pieces of employee benefit legislation since ERISA.  Chronological Summary of Major Post-ERISA Benefit Legislation provides a summary of the major employee benefits legislation:

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?

In last month’s End of Year ESOP Legal Considerations we reminded you that the Cycle B submission deadline for an ESOP Determination Letter was January 31, 2013.  If you are a Cycle B filer hopefully you have already submitted your filing or are preparing to do so today.  Here is a quick review of the process.

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).

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.

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?

I have come across a few plans where former owners of the company do not want to participate in the ESOP plan once it is in place.  Some sellers do not feel the plan was created for their benefit and/or having them not participate simplifies the plan allocation requirements if they made an IRC §1042 election. Whenever this request is made, the ERISA attorney needs to be advised and involved in the process.