Blue Ridge ESOP Associates Industry News

As the result of the Bipartisan Budget Act of 2018, and the subsequent issuance of proposed Treasury regulations, hardship distributions should generally be easier for participants to obtain, assuming they are covered by a plan with a hardship provision and assuming that plan sponsors are on board with the hardship provision changes that are optional.  Plan sponsors should be hearing from their recordkeepers and third party administrators regarding the default changes that will be occuring unless the plan sponsor:

As we approach the end of the calendar year, it is a good idea to start thinking about getting your Required Minimum Distributions (RMDs) paid out. For ease of process some clients will include RMD payments along with their normal distribution processing for the year. For others, these payments may be processed later in the year, for reasons such as capturing newly retired employees eligible for their first RMD payment. In any case, it is important to review your plan to ensure all necessary RMD payments have been taken care of.

Are you tired of paying fees for former participants with small account balances? Are you concerned with uncashed distribution checks as you try to meet your obligations in finding participants who disappear? There are solutions.

2018 Employee Ownership Conference in Atlanta

Are you attending the conference this week? Stop by our booth and enter your business card for a chance to win an Amazon Echo Dot (2nd Generation). Our Blue Ridge professionals will be speaking in the following sessions. 

Does your company need a written distribution policy?  The purpose of this article is to provide a high level overview of the importance of a written distribution policy and topics to consider. 

Your Plan Document will discuss the requirements for paying out distributions to plan participants once a distributable event occurs - death, disability, retirement, termination, QDROs or diversification.  Some plans also allow for in-service distributions, dividend pass-through, and hardship withdrawals, which you may want to include in your policy. The provisions listed in the document generally fall along the statutory guidelines, which are the maximum payout terms allowed by the Internal Revenue Code (IRC). Your written distribution policy should address form, method and timing of distributions payouts.

A distribution policy may be part of the plan document, yet most times it is a separate document. A separate document allows for easy modification when the need arises. Qualified plans are subject to IRC Section 411(d)(6) regarding distribution requirement modifications, however ESOPs are an exception to this rule as long as they are updated in a “non-discriminatory” manner. Along with the plan document, the IRS may request to review the policy as part of their determination review process.