Blue Ridge ESOP Associates Industry News

Quite often, we get asked by clients what they should do with the ESOP account balance of one of their participants that died without completing a beneficiary election form. So, what is one to do to prevent such a situation from happening?

Communication

A good best practice would be to include retirement plan beneficiary elections as a part of your employee on-boarding process.

If for some reason an employee fails to elect a beneficiary in the initial hiring period, it might be wise to consider identifying participants who have not elected. This can be done on an annual basis during participant statement distribution or another regularly scheduled election event.

Keeping your ESOP timeline current

“Deadlines spur action” is a common refrain of Andrew Brandt’s, one of my favorite Twitter commentators. Andrew is a former front office executive with the Green Bay Packers and current Professor at the Wharton School of Business. He uses this statement frequently when commenting on NFL players and teams that complete deals or contract negotiations at or near deadlines on the NFL schedule. This statement applies in many areas of life including what we will discuss in this article: ESOP plan administration timelines.

ESOP timelines can be an effective tool if certain conditions are met. The objective is to make them manageable and a mechanism that increases efficiency and awareness for all of the parties involved in the process.

Here are three thoughts to keep in mind so that an ESOP timeline is not just another task you complete and forget about but instead becomes an invaluable roadmap to successful ESOP plan administration.