Blue Ridge ESOP Associates Industry News

It would be quite disturbing to a person to wake up, look in the mirror and see the reflection of someone else. However, this is what happens when a leveraging transaction is set up, expected to be a mirror note, but the provisions of the note are not at all identical. You might be thinking that this is ludicrous, how could this happen to an ESOP? The answer is a lot more common than you would think. Understanding the ESOP loan is extremely important and vital to maintaining a compliant Plan.

It is very common for an ESOP to purchase shares through a leveraged transaction. It is also very common to see a two part transaction agreement between three entities: the Company, the ESOP and a financial institution. In stage one, a financial institution will lend the money to purchase the ESOP shares to the Company with a loan agreement, from this point on referred to as the External Note (aka Company Note). The second stage is the loan agreement between the Company and the ESOP to purchase the shares, from this point on known as the Internal Note (aka ESOP Note). In this scenario you have two separate loan agreements. When the provisions of the loan agreements are exactly identical, you have what is called a mirror note.

Keeping your ESOP timeline current

“Deadlines spur action” is a common refrain of Andrew Brandt’s, one of my favorite Twitter commentators. Andrew is a former front office executive with the Green Bay Packers and current Professor at the Wharton School of Business. He uses this statement frequently when commenting on NFL players and teams that complete deals or contract negotiations at or near deadlines on the NFL schedule. This statement applies in many areas of life including what we will discuss in this article: ESOP plan administration timelines.

ESOP timelines can be an effective tool if certain conditions are met. The objective is to make them manageable and a mechanism that increases efficiency and awareness for all of the parties involved in the process.

Here are three thoughts to keep in mind so that an ESOP timeline is not just another task you complete and forget about but instead becomes an invaluable roadmap to successful ESOP plan administration.

In this day and age we are increasingly reliant on receiving information electronically. With the desires to “Go Green”, many companies rely on electronic delivery of information to their clients. With respect to required ESOP notices, however, it is important to understand the rules of what can be delivered electronically to participants, and how those notices must be delivered. As an example, just putting a copy of your Summary Plan Description (SPD) on your company website may not be a sufficient method of delivering that document to your employees.

The Department of Labor (DOL) issued a regulation in 2002 which is commonly referred to as a “Safe Harbor” method for delivery of plan disclosure documents. Documents such as the SPD, Summaries of Material Modification to the SPD (SMM) and Summary Annual Reports (SAR) can be electronically posted to a website for participants to access. These electronic accesses to those plan documents though are limited to two categories of participants:

Super Bowl Sunday is an American tradition we all enjoy. ESOPConnection™ is becoming another American tradition ESOP companies enjoy. Blue Ridge ESOP Associates was first to market with a custom on-line tool for ESOP companies. ESOPConnection™ continues to get more useful.

Here are 10 reasons you should invest in ESOPConnection™:

Industry-wide trends show that plan participants have significantly increased their use of mobile devices. In response to these evolving technological preferences, Blue Ridge ESOP Associates is pleased to announce that ESOPConnection, the leading online access portal for ESOP participants, is now mobile-ready on over 30 different devices.

New Tax Notices

The Certificate Program for
Non-Professional ESOP Fiduciaries
February 22-25, 2015 San Diego, CA

Hosted by The Beyster Institute at UC San Diego

Program Overview
You are invited to participate in our third annual Certificate Program for Non-Professional ESOP Fiduciaries – to be held at the Rady School of Management, UCSD, Feb., 22-25, 2015.

One of the fundamental resources of the employee stock ownership plan (ESOP) movement is the large group of dedicated, well-intentioned people who agree to serve as trustees or other fiduciaries on behalf of their company’s ESOP. If you are one of those dedicated people, you have undoubtedly felt the concern that is inevitable when taking on that sort of responsibility. The Beyster Institute at UCSD has developed a special intensive education program to help relieve some of that concern - the Certificate Program for Non-Professional ESOP Fiduciaries.