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Esop Bank Account titling question


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Group:

I inherited from another esop advisor a client whose S Corp (Acme Inc) is OWNED 100% by an ESOP. 

Said bank account is titled 'Acme Inc.'

New TPA (former TPA retired) is suggesting there should be a bank account only in name of ESOP that reports all transactions. With no support or cite to a DOL reg. 

Fwiw, in a number of successful no change audits over last 12 years with S ESOPs, all with almost identical bank account names, no auditor has ever said there's an issue. 

Anyone have a cite/regulation or case that stands for position that an esop bank account needs to be titled with the name (ESOP)? 

Thank you in advance. 

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Isn't this fiduciary 101?   The assets of the plan have to be title properly or the trustee isn't doing their job.   I mean if titled wrong couldn't a company creditor try and make a claim on the plan's assets.  

By your logic would you be fine if all the stock was titled wrong?   Or it just a question of immateriality in your mind?  If the bank account doesn't have much money the risk is acceptable but not the shares??? 

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I don't have a cite, but ESOP Guy makes a great point that assets of the trust should be titled properly.  Perhaps the bank just messed up when setting up the account.  Have the plan sponsor provide you with the EIN of the entity that established the account.  If it's the Trust's EIN, it should be a simple fix to get the name of the trust on the account which would just make things crystal clear (again I don't have a cite that it's required, but why not remove all doubt?).  But if it's the Company's EIN and there is no reference to the trust or one of the trustees as the account holder, then I think it's less likely this would/could be considered a protected asset of the trust.

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  • 3 weeks later...

Just like a 401(k) plan if the ESOP has assets other than stock, it needs to be titled in the ESOP's name.  Since the ESOP distributions of stock to participants can purchased by the company using the put option or the ESOP holding only stock, it is common for the ESOP to not have an checking or investment account.  Just to confirm you are talking about an ESOP holding stock and other investments.  In that case, the checking or investment account needs to be in the trusts name.  

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