Blue Ridge ESOP Associates Industry News

The ESOP Association is diligently working in Washington on behalf of all ESOPs.  Below is the information that they shared to all of their members*.

Planning a company merger or an acquisition is complicated.  Various factors need to be considered.  Many times, the impact to your qualified plan(s) is overlooked.  Once a transaction is finalized, it’s often too late and the impact to plans can cause dire circumstances.  Mergers and acquisitions and the impact to the qualified plans involved require careful consideration and a proactive approach.  Reach out to your BREA Plan Administrator for more information to discuss the right options for your plan(s).

The Setting Every Community Up for Retirement Act (known as the SECURE Act) was signed into law by President Trump on December 20, 2019.   This bill created changes to a number of rules related to Qualified Retirement Plans, including ESOP’s and 401(k).  Some of the highlights of the bill include the following:

Blue Ridge ESOP Associates prides itself in preparing this quarterly newsletter to share information with our clients.  The most important item on everyone’s minds currently is the COVID-19 pandemic. 

Employee ownership through Employee Stock Ownership Plans (ESOPs) has stood the test of time and is built to last. ESOP champion elected officials on both sides of the aisle stood up for ESOPs during the 2017 tax reform process and ESOP law is still strong. While private company ESOP growth has not grown tremendously, the number of private company ESOP participants has grown to over 14 million employee-owners with wealth over $1.4 trillion. This tax efficient exit strategy continues to be a viable structure for business owners who value the employees who helped them grow the business and want their legacy to last. Research has shown that employee ownership through ESOPs increases productivity, helps secure a more respectable retirement, and keeps more jobs local. The National Center for Employee Ownership (NCEO) found that ESOP companies have almost 20% more revenue growth than the S&P Small Cap 600. During the last recession ESOP companies enjoyed double-digit revenue growth while other businesses contracted. Employee-owners have over twice the average retirement balance than non-employee-owners and 33% higher income from wages. ESOP companies cover a broad range of industries like Manufacturing (22%), Professional/Scientific/Technology (19%), Finance/Insurance/Real Estate (16%), Construction (11%), Wholesalers (9%), Retails (6%) and almost any other industry you can think of.

There is a lot of information coming out about the CARES Act, and we want to make sure our clients are immediately informed.

One piece of information that is timely and very important for our clients is that The CARES Act that President Trump has signed has the following provision:

"In one somewhat surprising twist, the CARES Act not only eliminates RMDs for 2020, but any RMD that otherwise needed to be taken in 2019 (and thus, would have normally been required to take such a distribution by April 1st, 2020, as well as a second RMD by the end of 2020) do not have to take either their 2019 or their 2020 RMD."

The following information is from Gentry Locke Attorneys:

CHARLOTTESVILLE, VA - March 26, 2020 - Marie Minton and Greg Washburn, the current owners of Blue Ridge ESOP Associates, are happy to announce that Levine Leichtman Capital Partners ("LLCP"), a Los Angeles-based private equity firm, has invested in Blue Ridge ESOP Associates ("Blue Ridge" or the "Company") in partnership with the existing owners and the management team. Terms of the transaction were not disclosed.

Blue Ridge ESOP Associates continues to monitor news about the evolving spread of the new coronavirus, or COVID-19, around the world.

As a mature company delivering essential services to clients like you, we have long had a plan in place. This plan ensures you will be supported regardless of events such as the spread of COVID-19. It accounts for multiple levels of business continuity and includes contingencies for everything from customer support, to IT and information security, to client services.

We are pleased to announce that Mr. Scott Freund has been promoted to Managing Director at Blue Ridge ESOP Associates. Scott has over 24 years of administration experience and has been with Blue Ridge since 2009 playing an integral role in providing administration and consulting advice to ESOP clients. Since coming to Blue Ridge, Scott has helped make our proprietary software, Blue Magic, more efficient so our professionals can spend more time consulting with our clients.  Scott has also been a valuable leader and mentor to our newer associates and has been integral in the development of our administration staff.