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Employer contributions to ESOP alocated based on compensation. ESOP provides that trust assets may be applied to pay loan. Upon repayment, shares are released under the Principal and Income method and are allocated pro rata based on compensation in the year of the loan repayment. ESOP has special "value rule" for the use of allocated dividends applied to pay loan. ESOP has substantial Employer cash contributions allocated to participant cash accounts. Can ESOP use allocated Employer cash contributions to pay off loan? If so, are shares released under the P&I method? How are released shares allocated back to participants? pro rata based on current year compensation under the formula (this seems unfair if the accounts were charged pro rata based on account balance)? Pro rata among participants based on the contribution debited from their cash account to pay loan? (value of shares returned to participant may not equal cash debited.) Must participant receive shares of equivalent value to the contribution debited from cash account to pay the loan (similar to treatment of dividends)? i.e., the loan payment is considered an equal exchange of cash for shares. Is this exchange considered reshuffling as described by the IRS? Should plan have a provision that address use of cash account to satisfy loan? Any comments/authority would be helpful.