lexi Posted December 5, 2006 Share Posted December 5, 2006 the question is this: could this ESOP get the 404(k) ESOP dividends invested deduction? the details are this: we have an ER that has a SINGLE pension plan w/ "moving parts." there is a 401(k) component, an EE match component and a profit sharing component, all under the same pension umbrella. the profit sharing part invests (100% as of right now) in its own (publicly traded) ER securities. the EE choose if they want to participate in the plan. the ER says that the part of the plan invested in ER securities is the "ESOP." assume that the ER invests only 5% or 1/2% of the ESOP part in the whole pensioit plan, as determined by EE demand. can the ER still get the 404(k) dividends deduction?? what is the authority i should be looking to; thus far, i have struck out on every avenue. desperate for an answer!!!!!!! Link to comment Share on other sites More sharing options...
QDROphile Posted December 7, 2006 Share Posted December 7, 2006 You have struck out because defining an ESOP by the investment decisions of participants is not legitimate. However, the IRS buys into it and you can find some letter rulings that demonstrate that the IRS is in on the scam. The rulings do not discuss the deduction question. Once you buy into the defintion of ESOP, the deductions follow from the statutue. This has become common with public companies that allow investment in employer securities. I don't understand why you are looking for an answer. The lawyer involved in the design of the plan (and probably the registration of the plan securities) a should be both familiar and comfortable with the arrangement and its implications for deductions. Link to comment Share on other sites More sharing options...
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