Employee Stock Ownership Plans (ESOPs) Archives - Page 7 of 14

View From McDermott: Hurricane Survival Guide for Employee Benefit Plans and Employers

by Diane Morgenthaler | Oct 5, 2017 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Health and Welfare Plans, Retirement Plans

According to U.S. News & World Report, estimates for the cost of Hurricane Harvey’s damage have come in as high as $190 billion, and damage estimates for Hurricane Irma are still rolling in but range up to $100 billion. To assist taxpayers affected by these devastating storms, the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation have granted multiple forms of relief to taxpayers impacted by Hurricane Harvey, Hurricane Irma, and other disasters enumerated by the Federal Emergency Management Agency.

Extension of Nondiscrimination Relief to Certain Closed Defined Benefit Plans

by Diane Morgenthaler and Kay Kemp | Oct 3, 2017 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Retirement Plans

The Internal Revenue Service (IRS) recently extended the temporary nondiscrimination relief for closed defined benefit plans. This extended relief is intended to enable closed pension plans (defined as pension plans that have been closed to new participants but continue to provide ongoing benefit accruals for certain participants) to more easily satisfy certain nondiscrimination testing requirements. In most cases where the relief applies, the closed defined benefit plan is aggregated with a defined contribution plan to satisfy the nondiscrimination testing requirements, and the relief assists the aggregated plan in passing nondiscrimination requirements that apply to accrued benefits and to certain rights and features relating to those benefits.

The original nondiscrimination testing relief for closed pension plans was provided several years ago in an earlier IRS Notice. This relief was already extended on two prior occasions, and the recent IRS Notice further extends the relief until the end of plan years that begin before 2019, as long as the conditions of the original IRS Notice continue to be satisfied. In 2018, the IRS also intends to issue final regulations under Section 401(a)(4) of the tax code that address the nondiscrimination requirements for closed pension plans. Until then, the IRS indicated that plan sponsors can still rely on the proposed 2016 IRS regulations under Section 401(a)(4) for plan years that begin before 2019.

Hurricane Harvey Relief for Employee Benefit Plans

by Allison Wilkerson and Diane Morgenthaler | Sep 7, 2017 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Retirement Plans

The Internal Revenue Service and the Department of Labor relaxed some deadlines for eligible employee benefit plans and expanded the availability of withdrawals and loans for eligible defined contribution plan participants in the disaster area. However, the Pension Benefit Guaranty Corporation announced that some of its required filings will not be extended automatically.

ESOPs and Artisan Distilling

by Marc Sorini | Jul 6, 2017 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Retirement Plans

Employee Stock Ownership Plans (ESOPs) are becoming a popular—and tax effective—way for companies to manage succession planning. When structured properly an ESOP can provide huge financial benefits to companies and their employees alike. There have been several craft brewers who have taken advantage of the ESOP structure in the past year, and we expect this trend to pique the interest of craft distilleries. In this article, originally published in Artisan Spirit, Marc E. Sorini and Emily Rickard explore at a very high level some of the issues involved with starting and maintaining a craft distillery ESOP.

Read the full article.

The Quandary of Publicly-Traded Employer Stock in a 401(k) Plan

by McDermott Will & Emery | Jun 20, 2017 | Benefit Controversies, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

Offering employer stock in a 401(k) plan investment lineup can seem like a win-win situation. It can enable employees to become company owners—real, skin-in-the-game, participants in their employer’s economic future—through a simple deferral election. The U.S. Supreme Court has even recognized the value of employer stock funds, confirming that Congress sought to encourage their creation through provisions and standards contained in the Employee Retirement Income Security Act of 1974 (“ERISA”).

However, in the wake of a series of high-profile employee lawsuits seeking recovery against Enron, Lehman Brothers, and other employers for losses from 401(k) investments in employer stock, such funds can—almost as easily—seem a recipe for disaster. This article examines the quandary that employer stock funds pose for plan sponsors, who must navigate ERISA’s careful balance of (1) ensuring fair and prompt enforcement of employee rights under employer-provided retirement plans while (2) encouraging employer creation of these plans.

Read the full article.

Originally published in Bloomberg Law, May 25, 2017

ESOP Trends in the Marketplace

by Allison Wilkerson | May 25, 2017 | Employee Stock Ownership Plans (ESOPs)

Over the years, employee stock ownership plans (ESOP) have evolved in many ways. Currently, ESOP transactions began to resemble traditional M&A transactions including financial structures, warrants and market rate sub-debt. In a recent presentation at the NCEO Employee Ownership Conference, Allison Wilkerson discusses current marketplace trends in structuring ESOP transactions, including the importance of pre-transaction structure analysis and post-transaction planning. Allison also goes over the beneficial tax planning opportunities associated with ESOP transactions.

See presentation slides here.

Upcoming Employee Benefits Innovators Roundtable Series!

by McDermott Will & Emery | May 4, 2017 | Benefit Controversies, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Privacy and Data Security, Retirement Plans

McDermott will be holding its annual Employee Benefits Innovators Roundtable Series this month. The roundtables offer experienced benefits professionals an opportunity to discuss cutting-edge, topical employer-driven benefit programs with their peers and members of McDermott’s employee benefits team. We are meeting in four locations this year. Join us in one of the following cities:

May 9 | Silicon Valley, California

May 11 | Los Angeles, California

May 22 | Chicago, Illinois

May 24 | New York, New York

The topics for our roundtable series sessions will include:

The Future of Employee Benefits Under the Trump Administration
Should Your Plan Cover All Drugs? (FDA-Approved/Unapproved, Off-Label, Marijuana, etc.)
ERISA Retirement Plan Fee Litigation – Learning From Recent Class Actions
Paying Off Student Loans as an Employee Benefit
Equal Privacy and Cybersecurity – Now Part of Your Plan’s Independent Audit
Human Rights Campaign (HRC) Equality Index – Opposite-Sex Domestic Partner Benefit

For more information about how to register for one of our roundtables, please contact Erin Nelson.

Acquisition Strategies for ESOP Companies

by McDermott Will & Emery | Nov 22, 2016 | Employee Stock Ownership Plans (ESOPs)

ESOPs have long provided an exit strategy for owners of privately held businesses and a platform for management buyouts. Mergers and acquisition (M&A) advisors increasingly look to leverages ESOPs to accomplish both conventional stock and asset acquisitions.

Once an ESOP company decides to pursue an acquisition opportunity, it will generally structure in one of three ways. As more fully described below, the acquiring company will (1) buy the stock or the assets of the target division or company; (2) merge with the target; (3) have the target create a new ESOP, sell the target to the newly created ESOP, and then merge the ESOP that purchased the target with the acquiring company’s existing ESOP.

Read the full article.

Maintaining Retirement Plan Documents after Revenue Procedure 2016-37

by Andrew Liazos | Oct 13, 2016 | Employee Stock Ownership Plans (ESOPs), Retirement Plans

At the 2016 Joint Fall CLE Meeting on October 1, 2016, Andrew Liazos presented on “Maintaining Retirement Plan Documents after Revenue Procedure 2016-37.”

As an employer sponsoring a retirement plan, you are required by law to keep your books and records available for review by the IRS. Having these records will also facilitate answering questions when determining participants’ benefits. As a plan sponsor you should keep the plan and trust document, recent amendments, determination and approval letters, related annuity contracts and collective bargaining agreements.

The presentation highlights key changes under Revenue Procedure 2016-37 and the consequential impacts on annual audits, plan drafting, choice of plan, existing plan administration, EPCRS and other various transactions.

View presentation slides.

Advantages of Using ESOPs To Structure Acquisitions and Divestitures In An Uncertain Economy

by McDermott Will & Emery | Aug 25, 2016 | Employee Stock Ownership Plans (ESOPs)

M&A advisors are becoming increasingly familiar with leveraged ESOP transactions and are routinely considering the ESOP platform in structuring acquisitions and divestitures. The first part of this article references the ways in which leveraged ESOPs have historically been used to provide a tax-advantaged exit strategy for privately held business owners. The article then discusses the advantages the leveraged ESOP structure can bring to M&A advisors and private equity groups charged with structuring acquisitions and divestitures during a down economy.

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