Blue Ridge ESOP Associates Industry News

Jessica A. Spittel

Recent Posts

Hurdles for Employee Ownership

Posted by Jessica A. Spittel

Dec 21, 2022 10:30:00 AM

After weighing pros and cons, you took the plunge and created an ESOP! Congratulations! This is new and exciting for everyone involved. You may have annual meetings to hand out statements, you may run contests to see who can guess the annual stock price, or you may hold events in October for Employee Ownership Month. You want your employees to share in the excitement of being part of an ESOP and throughout the life of an ESOP, you want to continue that excitement. You want your future employees to feel as much enthusiasm for the ESOP as there was when it was first implemented. To do that, you want to ensure new employees will have an opportunity to have ownership in the company.

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What is diversification in an ESOP and what are your responsibilities as a Plan Sponsor?

Posted by Jessica A. Spittel

Dec 22, 2021 10:02:13 AM

Internal Revenue Code Section 401(a)(28) allows employees to diversify a portion of their stock once they meet certain eligibility requirements. There are specific age and service requirements outlined by the IRS to determine who is a Qualified Participant, however your plan may allow for rules that are less restrictive.

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Topics: Diversification, Plan Document

Required Minimum Distributions – What you need to know

Posted by Jessica A. Spittel

Dec 12, 2018 2:30:00 PM

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.

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Topics: Distributions

The Importance of a Distribution Policy

Posted by Jessica A. Spittel

Sep 8, 2017 2:00:00 PM

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.     

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Topics: Plan Design, Distributions