Home » Publications »
ESOP Regulatory Rulings 1990-2013
by Corey Rosen
This is provided as a PDF, with no shipping charges. It also is available in a print version (for which shipping charges apply).
$75.00 for NCEO members; $150.00 for nonmembers
A 20% quantity discount will be applied if you are a member (or join now) and order 10 or more of this publication. If you need to order more than the maximum number in the drop-down list below, change the quantity once you have added it to your shopping cart.
This ebook may not be resold or given away to others. If you would like to share this book with another person, please purchase an additional copy for each recipient. For example, if you want a copy for yourself and two colleagues, choose the quantity 3, add it to your cart, and check out. You will then download one copy that you can also provide to your two colleagues. Thank you for respecting our rights as an independent publisher.
NCEO members who supply their members area username and password during checkout can download digital publications like this one immediately after submitting an online order. Others will immediately receive a download link that will become live within one business day.
You also may be interested in our related publication ESOP and 401(k) Plan Employer Stock Litigation Review 1990-2013, which categorizes court decisions in ESOP and 401(k) company stock cases from 1990 through mid-2013 and provides brief summaries for the ESOP-related decisions and, starting in 2010, most 401(k) cases.
Format: PDF, 22 pages
Publication date: August 2013
Status: Available for electronic delivery
Usage Rights for NCEO Digital Publications
When you download an NCEO digital publication that you purchase or subscribe to (or that someone purchases or sponsors for you), you may copy it to any computer or other electronic device you personally use, and you may print it for your own use. However, you may not share it with others unless you purchase a license to do so or buy a copy for each person.
Banks and Thrift Institutions
Definition of Employer Securities
Distribution Requirements, Procedures, and Taxation
Eligibility, Vesting, and Allocation Issues
Federal Contractor Reimbursement
Leveraged ESOP Issues
Mergers and Reorganizations
PAYSOPs (Payroll-Based Stock Ownership Plans)
Pension Plan Reversions
S ESOP Corporation Anti-Abuse Rules
S Corporation Issues Other Than Anti-Abuse Rules
Sale of Stock to an ESOP (Including 1042 Issues)
DiversificationEligibility. ESOP Cadre Guidance, November 2009: For purposes of diversification eligibility, an ESOP may use (1) "participant and former participant" instead of "employee" and (2) "year of service" instead of "year of participation," as long as the "year" in either case does not require more than 1,000 hours of service. A year of participation can also be defined as a year in which the individual has an account balance in the ESOP. A plan document may provide that a participant with at least 10 years of participation who terminates employment before reaching age 55 will become a qualified participant for diversification purposes upon reaching age 55 after termination of employment. The guidance indicates companies cannot change plans to make them more restrictive.
Eligibility. PLR 200234070: The IRS ruled that company stock previously held by an ESOP that was acquired before January 1, 1987, then transferred to a 401(k) plan in a corporate acquisition, will not be subject to the diversification rules of Section 401(a)(28)(C) of the Code. The plan acquired stock previously held by an ESOP. The ruling on the complex transaction also discussed how to calculate what the basis would be for calculating net unrealized appreciation for company stock.
Diversification Rules in Public Companies. Notice 2013-17: The IRS granted relief for public companies that need to amend their plans because of conflicting diversification requirements. Under Section 401(a)(28), ESOP companies must provide diversification options for employees who have 10 years of service in the plan and are 55 or older. Some companies do that by making a distribution to employees. That distribution could be considered a cutback in benefits, but the IRS specifically exempted this procedure from anti-cutback rules. Effective in 2006, public companies have had a conflict, however, in that they have a very different set of diversification requirements under Section 401(a)(35) than they did under the Section 401(a)(28) rules that until then had applied to them. Companies that became public after adopting the procedure on making a distribution to satisfy the 401(a)(28) rules, or that have not amended their plans in light of the 401(a)(35) rules that apply to them, have to make amendments to the plan because the distribution option now is no longer is protected under the anti-cutback rules. In this notice, the IRS outlines procedures for making amendments retroactively to comply with this potential conflict.