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Unless the plan documents says otherwise, this paragraph from the preamble to the 415 regs is what I have relied on when this question comes up. You are not required to count compensation on a FIFO type accounting basis. https://www.federalregister.gov/d/E7-5750/p-111 "As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415(c)(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year."

For the moment, let's shift focus away from issues related to disclosing information to participants who must make personal decisions about their ESOP interest, and focus on what the plan document says about voting rights. Do participants have the right to vote shares allocated to their accounts on the sale of the company or the assets of the company, on a dissolution of the company, or conversion of the company to another corporate status? Are there provisions that allow participants to vote unallocated shares? Does the plan designate each participant as a plan fiduciary? If the plan specifies that the participants must be involved in the decision to sell the company, then the participants will need access to information sufficient for them to make decisions.

It's based on the total account balance, not the amount of the loan. See 1.401(a)-20 Q&A-24

Concur with QDROphile that an ESOP involves conflicting interests at every turn. Concur with ESOP Guy’s observation about considering a letter of intent and any other express or implied agreement for not revealing confidential information. Concur with ESOP Guy’s observation about considering a fiduciary’s duty of communication. Also, impartiality. Consider that some employees can be helped by disclosure, and some employees can be harmed by disclosure. Here are a few of many further questions one might suggest to help the fiduciaries get lawyers’, accountants’, appraisers’, and others’ advice and think through some of the many conflicting duties: When is the next day a participant can do (or choose not to do) something? Is that day before, on, or after the next regularly scheduled valuation date? Might there be a need for an earlier valuation? If the dealmaking with the might-be acquirer proceeds to a due-diligence phase, how many of the target’s employees would be involved in collecting information to furnish to those executives who communicate with the acquirer? Is it feasible to restrict the target’s communications from and to the might-be acquirer to only the CEO, CFO, and CLO? Might disclosing the acquirer’s interest harm the company’s value because some executives and some talented employees might leave before the acquirer delivers an offer and before the target gets stay agreements? Might not disclosing the might-be acquirer’s interest harm the company’s value because some executives and some talented employees suspect an acquisition and, not knowing the acquirer’s identity, might leave quickly? How much or how little protection does the company get from nondisclosure, nonsolicit, noncompete, and garden-leave agreements. Recognizing conflicts between the company’s interests and the ESOP’s interests, should those people who will negotiate or communicate with the acquirer resign, recuse, or be removed from the plan fiduciary committee? Recognizing conflicts between a human’s interests, including her interests regarding future employments or engagements and compensation, and the ESOP’s interests, should those people who are so conflicted resign, recuse, or be removed from the plan fiduciary committee? Does a lawyer or accountant who regularly advises the company have a personal-interest conflict regarding the circumstances of a might-be acquisition? Does a lawyer or accountant who regularly advises the ESOP have a personal-interest conflict regarding the circumstances of a might-be acquisition? If the ESOP owns the company, is it feasible, to distinguish between what otherwise might be settlor decisions (including those EBECatty invites) and fiduciary decisions. Every decision deals with the plan’s asset and management of it. This is not advice to anyone.

Agree with both comments above. In many cases, we recommend that ESOPs still make a timely distribution/diversification payment as elected by the participant, but provide true-up payments after the transaction closes for the difference between the per-share distribution/diversification value and the per-share transaction value. There are a few ways to do this, each with its own complications. You'd need to decide where to draw the line on who gets a true-up payment; often, we will start with those who received plan distributions/diversifications after a binding LOI has been entered. But this is a judgment call in each case.

This is a delicate situation. The fiduciary will want to have the benefit of advice of competent legal counsel as a matter of prudent administration and, separately and cynically, protection from liability. That makes any specific observations in this forum irrelevant. Gratuitous comment: ESOPs tend to provide the most difficult fiduciary problems because ESOPs have so many incompatibilities with ERISA principles.

Can they legally do that? In many cases until the sale is final both sides are bound by confidentiality agreements that don't let them speak about the negotiations and possible sale. Also, letter of intent doesn't sound final. So if the deal can be broken disclosing it could cause people to not sell their shares and could be harmed if the sale falls through. You are rightfully concerned to worry about fiduciary responsibility. There are court cases where such people have been forced to pay people who sold at the lower price to make them whole to the sale price. However, given things like above disclosing it might not be allowed or even right. This client needs to go to an ERISA attorney who is very familiar with this topic. You can find times where the answer will be to delay payments until more is known. I have seen cases where the recommendation is to not pay anyone, diversification nor terminated participants even if it goes past the next year end. Obviously that raises questions of what about the law that says they have to be paid. This is very tricky becasue there are some large possible liabilities for people. You need something better than free advice on this forum for this one unless it is the free advice to find good paid advice.

You were taught wrong. The due date of the contribution is the due date of the employer's tax return, including extensions. See IRC 404(a)(6).

That the plan is discontinued or even ended, or that the employer dissolves, is not an excuse from ERISA § 103’s command for an audit of the plan’s financial statements. Consider whether a plan-accounting year ends when the plan pays or delivers the plan’s final distributions. For each plan, consider whether the employer or the plan needs a reserve of amounts to pay the independent qualified public accountant’s fee.

I would agree with Gina to amend the last 5500 that was filed, update it to meet the requirements of a "final return," and attach a PDF statement explaining the plan is/was exempt from the 5500 requirement and why, and that the 5500s were filed in error.