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To you, the ESOP is a retirement plan that has its assets invested in the stock of the company that employs you. You hope that the value of your account goes up because the company is successful and and the value of the stock goes up. A sale of the company may or may not put an end to the ESOP, and with favorable economic consequences if you are lucky. You get statements about the value of your account, which should also let you know what the value of the stock is. If you think you have a more exalted position in the life of the company because of the ESOP, forget it unless you enjoy the agitation and artificial intrigue.

It has been a while since I worked with plans with life insurance in it. But when I did I never saw a insurance company that issued the 1099-Rs for the PS58 costs. Not only did we as the TPA have to issue the 1099-Rs but we had to often times fight with the insurance company to get the PS58 costs from them. We worked on our clients to work on the agent who sold the plans to them to do the footwork on getting the PS58 cost with mixed results.

Agreed, most vendors won't take checks and the participant has to write a check to the plan sponsor who then has to make the loan payments. I'd say the clock starts when the check is received. If the participant is late it is not a failure to remit timely.

I think it is appropriate to report insurance cash values as assets. Without looking anything up, I think there are parts of the instructions that talk about contracts with insurance companies that do NOT require reporting, but that is where a plan is offloading liabilities, e.g. buying an annuity contract. In real life, purchasing a life insurance contract in a plan is absolutely just a transfer from one asset to another - the policy will happen to have little or no value at the end of the first year, but so be it. For anyone who thinks they shouldn't be reported, then the question is: suppose the insurance policy is surrendered and the money is invested elsewhere, how do you report that sudden influx of money? As far as what to do with a policy for a participant entitled to a distribution, now you will experience why insurance in a plan is so bad - policies effectively get trapped. If the participant wants to keep the policy, and they take it as a distribution, the cash value is taxable (minus accumulated PS-58 costs, if anyone was keeping track of that). They could just surrender it and roll over the proceeds. They can buy the policy if they have cash sitting around, and the money that was used to pay for the policy can be rolled over. Or they can borrow most of the money out of the policy (the loan proceeds become part of the rest of the account and can be rolled over) and then take the stripped-out policy as a taxable distribution (maybe the cum PS-58s will cover some or all of it) or buy it for the reduced cash value. Either way you wind up doing a lot of work...

I can assure you the vendor HATES this - as they aren't geared for taking in indivual checks. Requires manual processing. If the client is "influential" enough, they may accommodate that - but as you point out the problem is the records (recordkeeping and payroll) can get out of sync. The recordkeepers I've worked for prefer the employer to take the checks and remit the money as part of the normal payroll feed-contribution deposit.