Our ESOP has always paid out a lump sum when an employee leaves the company.

The company’s ESOP plan does contain provisions for a 5 year installment of distributions.

An employee was terminated. A few months after this termination he received his ESOP statement indicating how many shares were in his account.

He was instructed by a member of the ESOP committee (and also the company’s benefit/plan administrator) to come to the company’s office to sign the required documents for the ESOP payout.

Three forms were presented to the terminated employee and signed:

1. “Participant election & Authorization Form”

Completed and signed by ex-employee. (No section for company/ ESOP representative to sign.)

Form indicated a direct rollover to an IRA.

2. “Distribution Consent Form”

Completed and signed by ex-employee and signed by company/ ESOP representative.

Form indicated to receive payment prior to normal retirement age.

3. “Stock Power Form”

Completed and signed by ex-employee. (No section for company/ ESOP representative to sign.)

Form indicates that ALL the ex-employee’s ESOP shares (actual number of shares listed on form) were to be transferred to the company.

(Form read as follows: “FOR VALUE RECEIVED, the undersigned hereby, sell, assign, and transfer unto” the Company. )

The form also indicated the following: “The undersigned hereby irrevocably constitute and appoints the Secretary of the Corporation as attorney to transfer the said stock on the books within named Corporation with full power of substitution in the premises.”

These completed forms were left with the company’s benefit/plan administrator and ESOP committee member.

Copies were given to the ex-employee.

Six weeks after these forms were completed the company has amended the ESOP’s distribution policy.

The ex-employee is no longer being offered the lump sum payout and is only being offered a 5 year distribution payout. (Note: No form of payout has actually occurred.)

The ex-employee is being requested to complete the same 3 forms again, this time indicating a 5 year distribution.

The ex-employee contests that he has already sold ALL of his ESOP stock to the corporation is expecting his lump sum distribution.

Is the company required to pay this ex-employee his lump sum distribution?

Thank you for your time and any help you can provide.

Lisa

(email: lisa_grecco@yahoo.com )

cash balance plan

ppt is age 70

3-year average comp is 250k (2013, 2012, 2011)

415 dollar limit of $205,000, actuarially increased from 65 to 70 exceeds the $250,000 comp limit

cash balance account is $3 million

life annuity under plan's formula without regard to 415 is $257,000/year

plan's actuarial equivalence is 3-segment rates/IRS mortality for 2013

Is the max 415 lump sum equal to the lesser of

1. $3 million

2. $250,000 x lump sum factor using 5.5%

3. $250,000 x lump sum factor using plan's basis?

thanks

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Background

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Thank you

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