Tax Cowboy Posted June 28, 2022 Share Posted June 28, 2022 Group: Client's esop has been under audit for 2018-2020 by irs TEGE. The IRS recently issued its notice of deficiency stating the plan was ineligible. (much of which related to a former esop advisor and much longer story) The TPA has calculated that there are 2 participants who left the company in 2020 and have not received any distributions for their vested shares. The distribution amount would be approximately $20k each. We are assessing what steps to take for plan participants shares, if any. Q:Is trustee/plan administrator still obligated to pay distributions for a plan year that has resulted in being disqualified? Q: Wouldn't any share value be zero? $0. So partipcants even if fully vested, would have no value. Client plans on filing in tax court to challenge. Q: Does trustee have ability to freeze plan until a court has resolved the issues? Thoughts and comments appreciated. Thank you Link to comment Share on other sites More sharing options...
ESOP Guy Posted June 28, 2022 Share Posted June 28, 2022 Most of your questions seem like general legal questions but the price question. Why would the price be zero vs the appraised value? Luke Bailey 1 Link to comment Share on other sites More sharing options...
Luke Bailey Posted July 2, 2022 Share Posted July 2, 2022 On 6/28/2022 at 7:38 AM, Tax Cowboy said: stating the plan was ineligible You mean, "disqualified, right?" On 6/28/2022 at 7:38 AM, Tax Cowboy said: :Is trustee/plan administrator still obligated to pay distributions for a plan year that has resulted in being disqualified Probably. Obligations under the plan under ERISA do not depend on plan qualification. On 6/28/2022 at 7:38 AM, Tax Cowboy said: Wouldn't any share value be zero? $0. You said they were owed $20k apiece? On 6/28/2022 at 7:38 AM, Tax Cowboy said: Does trustee have ability to freeze plan until a court has resolved the issues Trustee's obligation is to act with prudence, diligence, and loyalty to the plan's participants. Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
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