ESOP1

Assuming for the sake of argument that the deposits were late, why not work something out with the new recordkeeper? I have to think for the sake of goodwill they would kick in some if not all of <$100.

Thanks guys. You confirmed my thoughts. There is an independent fiduciary with counsel and a financial advisor, and the seller has counsel too. I don't believe in this obviously hypothetical situation the company has counsel other than the seller's counsel. Seller is still working there. ESOP Guy's last paragraph essentially sums up where we are. Yes, the DOL is auditing, which of course complicates everything. I think the parties will have to come up with the least worst solution. If it's restructuring, a tax expert should be consulted.

Hypothetically speaking, suppose you had debt owed by the ESOP to the selling shareholder totaling $4 million, with the company as the guarantor. Primarily because the company's payroll can't even come close to supporting a deductible contribution equal to the loan payment, the company made the loan payment directly to the selling shareholder in the prior year and that is continuing into the current year. An option for solving what will be an annual problem is to have the company assume the ESOP's debt to the selling shareholder and negotiate a new inside loan between the company and the esop that can be supported by using deductible contributions to make the payments. Assume that would amount to $400,000. The term of the old and new esop notes would be the same so the share release would not change. The question/concern is does this restructuring create issues because of the uneven exchange of notes? A deemed dividend to the esop? A forgiveness of debt? Something else? The parties are well aware that this hypothetical plan should not have been set up the way it was, nevertheless it was so they have to deal with what they have. Another option is a redemption, but for reasons of cost and an ongoing DOL audit the preference is to look at the restructuring first. Thoughts on the restructuring will be appreciated. Thanks.

What does the plan document say computing the SH match and profit sharing contributions? I'll guess it doesn't talk about using the definition of compensation you have noted.

On the new Form 5300, Line 12 asks if interested parties have been given the required notice and then says "attach statement". As opposed to all the other lines that say attach statement, the instructions for line 12 say nothing about attaching a statement or what it is supposed to say. If they want a copy of the Notice to Interested Parties, is it too much to ask that the instructions say so? Maybe this is a carryover from the old line 12 which asked a different question but had the attach statement requirement which was then explained in the old instructions? How are people handling this line?