Blue Ridge ESOP Associates Industry News

Managing an Employee Stock Ownership Plan (ESOP) involves much oversight. As a Plan Sponsor reviewing the reports provided by your Third Party Administrator (TPA) is very important. In this article, we will explain the elements plan sponsors should review when analyzing the various reports sent by your TPA to ensure compliance and accuracy of the plan administration.

Final Hardship Regulations

At the Wisconsin ESOP Spring Conference this week, our Blue Ridge professionals, Beth Bauer and Pam Themar, will be speaking together about the "Administrative Top 10 Reasons your TPA gets Called". In this session, a discussion will be led on a list of hot topis that can occur through the life of an ESOP.

At the Illinois ESOP Spring Conference last week, Kevin Rusch presented on a panel that reviewed the roles of "Trustees & TPAs". The panel was able to answer questions from basics like what do they do and why does your company need them to more complex such as share allocations and limiting liability. The purpose of the session was to help companies manage the day-to-day operations of their ESOPs.

Today, Kevin Rusch presented "Repurchase Obligation Studies: How to Avoid Garbage In/Garbage Out" at the New South spring event today. The key to a successful Repurchase Obligation Study is the assumptions that are used. Assumptions regarding company value, future contributions/dividends rates, employee turnover rates, distribution policy provisions all play a key role in projecting future obligations. In this session, Kevin and co-presenter, Kelley Finnell of Executive Financial Services, discussed the selection of reasonable assumptions and considered how the three distribution methods (Recycling, Redeeming, and Releveraging) can be used to manage a company’s future repurchase cash flow obligations. The presentation  included case studies, planning tips, and audience participation.

As the result of the Bipartisan Budget Act of 2018, and the subsequent issuance of proposed Treasury regulations, hardship distributions should generally be easier for participants to obtain, assuming they are covered by a plan with a hardship provision and assuming that plan sponsors are on board with the hardship provision changes that are optional.  Plan sponsors should be hearing from their recordkeepers and third party administrators regarding the default changes that will be occuring unless the plan sponsor:

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.

Are you tired of paying fees for former participants with small account balances? Are you concerned with uncashed distribution checks as you try to meet your obligations in finding participants who disappear? There are solutions.

The Heart of America's annual spring St. Louis ESOP seminar is tomorrow! At this conference, you will have the opportunity to hear Anthony Brunsvold co-present at "The Great Debate: ESOP Sustainability" from 11:00 a.m. to 12:00 p.m. Hot topics that bring challenges to the management of ESOP companies will be discussed with suggested strategies that might help such challenges as distribution policy, repurchase methods, funding strategies and releveraging.