Blue Ridge ESOP Associates Industry News

Thanks to Christopher Croft of the Maryland Center for Employee Ownership for his efforts in Annapolis to introduce this bill to eliminate capital gains taxes on the sale of a business to an ESOP, a qualifying employee benefit trust, or direct stock purchase plan.

We are pleased that Salem Distributing hosted their Congressional Rep. Virginia Foxx at their offices recently. Below are the highlights of the Congressional visit recapped by ESCA.

It’s the start of a brand new Plan Year and my Blue Ridge Administrator is asking me to participate in an annual welcome call to discuss the timeline. Didn’t we just do this last year? Why does my Administrator keep pressing this matter? What is the importance? The answer to these questions is YES, the timeline is a very important tool in ensuring a successful administration process.

If you asked three people at your company what their roles are as employee owners, what answers would you hear? More importantly, would the responses be the same or even similar?

At some firms, the answer is no.

It’s no because defining employee owner roles and responsibilities is an ongoing challenge. But it’s a critical issue to address because it’s an essential building block in the foundation of your company’s success. Unfortunately, if you haven’t invested the time, energy and resources to define employee roles and responsibilities, people will do it themselves. Their definitions may wander far afield of your ideas and harm your ownership culture, rather than enhance it.

Here are four practical considerations in your effort to successfully define what it means to be an employee owner at your company.

Providing accurate, detailed information is crucial for preparing required annual compliance testing and allocations to participants.  Blue Ridge has enhanced the client experience for our annual request for information to aid our clients in this annual requirement and have streamlined our year-end data request for a more user friendly experience. In addition, we’ve programmed our system to allow you to view the prior year responses to our questions for an easy comparison of information.  For those questions that have not had any changes you will easily be able to convert information from the prior year into the current year fields.   We hope this simplifies providing information each year.

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.

Whether you process Form 1099-Rs yourself or through a third party this is the time of year to reconcile data accurately. Below are some tips for gathering data and ensuring accurate delivery of your reporting requirements:

2017 Form 5500 – No Big Changes

The IRS has released advance copies of the 2017 Form 5500 and instructions.  The previous year’s optional compliance questions are gone, along with information about paid preparers.  We don’t expect to see a major revision for several years.

Tax Reform

As of this writing, Congress is still working out tax reform legislation.  The good news so far is that we’re not seeing anything that negatively impacts ESOPs.

Minimum Distributions and Missing Participants

Thank you, Congressman Dave Brat, for speaking at The ESOP Association Mid-Atlantic Chapter in October and for sponsoring the pro-ESOP bill HR 2092 yesterday! Has your company hosted a Congressional Site visit to promote employee ownership? Is your Congress representative also a cosponsor? Find out here.