Blue Ridge ESOP Associates Industry News

Given the tremendous devastation caused by Hurricane Harvey, the IRS has issued two relief declarations that may be of interest to plan sponsors.  The first extends to January 31, 2018 the time for filing Form 5500 and certain other returns that would otherwise become due for filing between August 23, 2017 and January 31, 2018.  Affected employers are those in the counties covered by the relief announcement (listed on the IRS website) and those who are unable to complete filings because they can’t obtain required filing data from a bank or other service provider in the covered areas. The IRS news release is at https://www.irs.gov/newsroom/tax-relief-for-victims-of-hurricane-harvey-in-texas. 

There was a participant who moved away.
Where has he gone?  He didn’t say.
Our paths never cross.
And now he’s lost.
He’s due some money. But how can I pay?

Especially for plans that have a period of delay prior to distributing participant balances, it is only a matter of time before you may come across a former participant with a vested balance that you are unable to contact.  When mail comes back as undeliverable, and the phone number on record no longer belongs to the former employee, what further action is required?  Finding missing participants can be a challenge.  Fortunately there are guidelines for a fiduciary to follow and your third party administrator is happy to assist with the process.

First, check the plan document. This advice rings true for just about every issue that may arise with a qualified retirement plan.  Your plan document may include the steps to be taken to locate a lost participant and the steps to be taken if the participant cannot be found. 

The US economy added 209,000 jobs in July, dropping the unemployment rate to 4.3%, the lowest level in sixteen years. It’s no secret that it’s getting more difficult to recruit and retain employees. Employee ownership gives you a clear advantage against the competition, but only if you effectively communicate its benefits to current and potential employees.

Here’s three practical ideas you can integrate into your written, electronic, video, and face-to-face communications to gain the employee ownership’s recruitment and retention dividends.

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.     

The Summary Annual Report (SAR) is a summary of the IRS Form 5500 that must be distributed to all plan participants. You’ll typically receive a copy of the SAR with your plan Participant Statements. Compliance is mandatory, and penalties for willful noncompliance can include fines in excess of $100,000, imprisonment up to 10 years, or both.

Visit #1: James Estes, Regional Representative for U.S. Senator Thom Tillis (R-NC), visited ESCA Board member Schweitzer Engineering Laboratories (SEL) Charlotte facility last week. SEL employee-owners and Government Affairs Representative Larry Camm spoke with the Senator's Regional Representative about the culture of employee-ownership and gave a tour of the SEL Charlotte facility.

The National Center for Employee Ownership hosts live webinars throughout the year for ESOP companies. Blue Ridge ESOP Associates' professional, Kevin Rusch, will be presenting next Wednesday, August 29.

Come to the ESOP Nuts and Bolts seminar Tuesday, August 29th in Oconomowoc, Wisconsin.