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Ways to Design Your ESOP and 401(k) Plan to Work Together

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This replay was recorded on April 23, 2019.

About This Meeting

Most, if not all, ESOP companies also have a 401(k) plan. Employers should view these two programs together - not separately. Discussion topics include:

What should be your company's targeted annual retirement plan benefit for covered employees? Is it 5% of compensation, 7% of compensation, 10% of compensation? Discuss how to structure the annual ESOP contribution to hit that target, when combined with the company's (match) contribution to the 401(k) plan. This is especially relevant in a leveraged ESOP when you are deciding what the term of the ESOP Loan (and, therefore, the annual Company contribution for payment of principal and interest) should be.
How to use the Company's ESOP contribution to make your Company's 401(k) Plan "safe harbor".
How to use the Company's 401(k) Plan for transfers of diversification-eligible distributions from the ESOP.

Understand how the limits on annual deductions and on annual additions to individual accounts work when you have both an ESOP and 401(k) Plan.


John R. Nelson

presenter photo

NFP Retirement, Inc.

John is managing director at NFP Retirement, Inc. He leads a team of specialists who focus on delivering consulting, investment advisory and plan design services. John graduated from Loyola Law School in Los Angeles, where he was a member of the Loyola Law Review. He is a nationally recognized ERISA attorney. John was named Defined Contribution Plan Consultant of the Year in 1998 by PLANSPONSOR magazine.