Update on FASB ESOP Disclosure Requirements Effective in 2012

Review of ESOP Built-In Gains (BIG) Tax Rules from 2009 - 2013

Uncertainty for ESOP companies contemplating Converting from C Corporation to S Corporation continues.  One of the factors in considering a change is that assets sold within a period after the conversion from a C Corporation to an S Corporation may be subject to the IRC Section 1374 – Built-In Gains (BIG) Tax.  The holding period or “recognition period” depends on the year of the disposal of assets.

2013 ESOP and Pension Plan Limits

The IRS has announced the 2013 pension plan limits, including the following:

ESOPs with Discontinued Contributions

You may have an ESOP or work with a company where the employer has suspended contributions to the plan.  While an employer is not required to contribute to a plan each year, contributions must be recurring and substantial.  To the extent the ESOP has “complete discontinuance” of contributions, the plan is treated as terminated for vesting purposes and affected employees must become 100% vested, as stated in IRC Section 411(d)(3).

Another Look at the DOL ESOP Fiduciary Regulations

Yesterday we shared the latest timing update that the revised DOL ESOP Fiduciary Regulations will be available in July 2012 (or later)The Department of Labor Wants to Redefine “Fiduciary” to Include ESOP Appraisers. Why? discusses how the DOL has still not provided a meaningful analysis of the improper ESOP stock appraisals they cite nor quantified the extent of the problem.  The article provides an overview and analysis of the proposed regulations, discusses valuation industry recommendations, and provides an update on the status of the revised proposed regulations:

DOL ESOP Fiduciary Regulation Update: July 2012 (or later)

U.S. Labor Department to release fiduciary rule by July provides an update on the timing of the DOL Re-Proposal of the DOL Regulation to Change the Definition of ESOP Fiduciary

Update on DOL ESOP Fiduciary Regulations

The January 17, 2012 Employee Ownership Update is online and discusses the following:  

2011 ESOP Required Minimum Distributions

What are Required Minimum Distributions?

IRS ESOP Determination Letter Backlog

Earlier this week we discussed the IRS ESOP Determination Letter Timing Update.  During the October 28, 2011 IRS phone forum on Determination Letter Issues Regarding Employee Stock Ownership Plan, the IRS acknowledged that at one point they had a backlog of 1,500 determination letter requests from two submission cycles.  During this process they found a need for a “substantial amount of interpretive guidance.”  To address this they did they following:

IRS Provides ESOP Determination Letter Timing Update

On October 28, 2011 the IRS conducted a phone forum on Determination Letter Issues Regarding Employee Stock Ownership Plan.  In the forum they discussed where they are at in the review of determination letter applications for the 5-Year Remedial Amendment Cycle and for IRS Form 5310 plan terminations:

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

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