Since a seminal case in 1985 (Massachusetts Mutual Life Insurance Company v. Russell, 473 U.S. 134), courts have largely, if not unanimously, concluded that individuals cannot sue ERISA plan fiduciaries for individual losses to the plan.
Many ESOP-owned companies view the termination of a participant's employment as a time to also terminate the participant's investment in the employer's stock. Employers have considered a few methods for accomplishing this investment conversion.
Reporters and skeptics often ask us "isn't it too risky to be in an ESOP?" After all, they say, you could lose your job and your retirement.
It's an understandable concern, but the real question should be "Is It Too Risky Not to Be in an ESOP?"
As a shareholder of the company, an ESOP may receive either C corporation dividends or S corporation distributions. These dividends or S distributions are generally available to be applied to the ESOP's debt payments.
People often ask me why, if employee ownership is such a good idea, more people don't do it. There are a lot of reasons, but the main one is that most business owners don't know much (or anything) about it, and what they do know is often wrong.
One of the most interesting issues in employee stock ownership plan (ESOP) repurchase obligation planning and funding is whether shares should be recirculated in the ESOP or redeemed by the corporation.
The concept of the safe harbor 401(k) plan design is to avoid the need to perform the special nondiscrimination testing applicable to 401(k) plans. Such tests are known as the average deferral percentage (ADP) test and the average contribution percentage (ACP) test.
This article combines a set of essays written from 2012 to 2016 on Section 409(p), the rules that seek to prevent S corporation ESOPs from being used as abusive tax shelters.
Last weekend, I had the privilege of listening to one of my favorite ESOP people, Roger Ryberg of Windings, Inc., talk about the ESOP at his company at a conference of the Business Enterprise Institute.
