Blue Ridge ESOP Associates Industry News

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.     

Find the information, ideas, and advice you need to make better ESOP decisions at The Fall ESOP Forum in Tampa, FL, this October 3-4, 2017. Both experienced attendees and newcomers will leave the Fall ESOP Forum better informed and better prepared to evaluate and implement the next steps for their companies. 

Blue Ridge ESOP Associates is proud to be sponsoring this conference with Renee Stadtmueller presenting in the following session.

“ESOP Distribution and Diversification Practices”

Distribution rules have more flexibility than many people think, and finding the right approach can help you make your plan more sustainable

Tuesday, October 3 - 9:30-10:15 a.m.

Renee Stadtmueller, CPA, QPA

Renee is a Director at Blue Ridge ESOP Associates. She has more than 19 years of experience providing administration and consulting advice to ESOP clients. She is a CPA and holds the QPA designation from ASPPA. She works closely with plan sponsors, accountants, advisors and legal counsel to provide guidance on plan design, compliance and operation. She is a member of the NCEO, The ESOP Association, and ASPPA. She has served as a chairperson for ASPPA's Education and Examination ESOP Certificate Subcommittee and as the vice president of programming for the Wisconsin Chapter of The ESOP Association. Renee received her bachelor of business administration in accounting and finance from the University of Wisconsin-Oshkosh.

***************

Some ESOPs permit participants to take a lump sum distribution from their accounts.  Some may provide an option for all or a portion of the distribution to be paid in shares of Employer stock.