In recent years, the Department of Labor (DOL) has had a laser-like focus on valuation issues when privately held companies establish employee stock ownership plans (ESOP). In particular, the DOL is concerned with valuations that rely upon unrealistic growth projections, which lead to the ESOP paying too much (in the DOL’s view) for the shares of employer stock. The DOL has raised this issue in litigation, and in 2014, it entered into a settlement agreement with GreatBanc Trust Company (GreatBanc). While the GreatBanc settlement is legally binding only on GreatBanc, the DOL promoted it as a set of best …
One question that has been on the minds of plan sponsors is how aggressive the Department of Labor (DOL) under President Trump will be compared to that of President Obama. In recent years, the DOL made a priority of investigating ERISA fiduciary issues, with a particular focus on employee stock ownership plans (ESOPs). After the DOL delayed the effective date of the ERISA fiduciary rule, some commentators speculated as to whether the DOL would scale back its priority on reviewing and auditing ESOPs. A recently filed case (Acosta v. Reliance Trust Co., Inc. , E.D.N.C., No. 5:17-cv-00214, complaint filed …
Employee Stock Ownership Plans (ESOPs):
A Tax-Advantaged Strategy for Growth, Liquidity and Succession Planning
In an uncertain tax and financial environment, business owners are increasingly looking at ESOPs as a potential strategy for tax-preferred growth and business succession planning. Join Porter Wright and GBQ Consulting LLC as we present a morning seminar discussing the ins and outs of ESOPs.
Friday, October 11
8:00 – 8:30 a.m.
Registration and Breakfast
8:30 – 10:30 a.m.
Topics to be discussed include:
- What is an ESOP?
- Why adopt an ESOP?
- ESOP financing considerations
- ESOP valuation considerations
- Tax planning for selling shareholders
- Is an
The Internal Revenue Service (“IRS”) recently announced cost of living adjustments affecting retirement plans. These new limitations are effective for tax year 2012. Many, but not all, applicable dollar limitations will increase. For this purpose, the IRS uses an adjustment process that is similar to the process used to adjust Social Security benefits (which also will increase effective in 2012).
Some of the more important increases relevant to retirement plans are as follows:
- the elective deferral limit applicable to 401(k), 403(b) and certain 457 plans will be increased from $16,500 to $17,000;
- the dollar limitation on the maximum annual benefit
The Department of Labor’s Employee Benefits Security Administration(EBSA) has put the brakes on its proposed rule on the definition of a fiduciary, which was slated to become final in the near future. EBSA’s goal for the regulatory change was to ensure that potential conflicts of interest among financial advisors would not compromise the quality of investment advice to individuals. Many employers were concerned that the regulation could increase the costs of investments in their 401(k) plans, and undermine efforts to educate employees about investments and retirement planning. The proposed regulation would also have turned employee stock ownership plan (ESOP) …