Degrand

What plan assets are being used? With all do respect, I disagree and most ESOP professional would too. By your analyses, liabilities from the Company to a DQ person (nonqualifed comp or refinancing non-ESOP loans) would be a PT and would have to meet an exception. That is simply not true. The loan is between the company and the bank. The ESOP fiduciaries are not involved if the Company refinances the bank debt. As long as the debt between the ESOP and Company is not being refinanced, it is not considered a refinancing that would have to comply FAB 2002-1.

NUA is usually not applicable to ESOP since distribution are made in installments. A lump sum distribution is required to be eligible for NUA treatment. In addition, distributions rolled over into another qualified plan are not eligible.

Since this not an ESOP loan, it is a corporate decision to refinance a commercial loan. The loan between the corporation and the ESOP will continue to be treated as an exempt loan. The only issue is whether the board is a making a good business decision in the best interest of the shareholder (i.e. the ESOP). 29 CFR 2509.75-2(c), 4th paragraph is not applicable because the party is interest (the board member) isn't not dealing with the ESOP. I agree that the Company should seek other bids which would allow them to compare the terms. If the board member provides better terms, the corporate can/should move forward with refinancing the loan.

I keep looking at the regulations under 1.401(k)-1(d)(3)(iv)(E) and (F). The "all other plans" definition is limited to (d)(3)(iv)(c)(4) and (E)(1). It doesn't seem to apply to (E)(2) which is suspension rule. Even 1.409A-3(j)(4)(viii) says a plan may cancellation a deferral election. Do we have to cancel nonqualified deferral?