ESOP Compensation for Compliance and Nondiscrimination Testing

One of the most important items that a plan sponsor will need to gather for ESOP administration purposes is plan compensation.  The legal compensation requirements are defined by the Internal Revenue Code and your specific plan requirements are defined in your plan document. 

Compensation is defined for allocating ESOP and other qualified retirement plan contributions, determining deduction limits, and nondiscrimination testing.  Depending on your plan design, there may be differing definitions for each plan component/money source (e.g. ESOP, safe harbor match, discretionary profit sharing, salary deferrals, etc.).

ESOP Safe Harbor Contribution

Many ESOP companies either make or have considered making a safe harbor matching or discretionary contribution in their ESOP or 401(k) plan.  As the year end approaches, now is a good time to revisit the safe harbor contribution.

Keep Your ESOP On Track and On Time
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