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Group: Facts/assumptions as follows. Client owns an S-Corp and sets up an S-ESOP with 20 eligible participants/employees. Value of S-ESOP stock is $20k when sold to ESOP Trust and loan is established to be paid off within 5 years. 100k shares outstanding. Assume 6 yr step vesting. ESOP Loan paid off by yr 3. TPA informs me that stock is allocated proportionately to payoff of ESOP loan. By yr 4 all of the 100k stock has already been allocated to the above-referenced 20 participants. Q: What happens when 3 new employees begin work in yr 4 and begin to vest by yr 6? Q: How do you properly allocate shares/benefit to new employees? Is TPA correct? I'm informed by the TPA that the only way to provide a benefit to the 3 new employees is if - and when - the original 20 ee's retire/leave and then forfeit their allocated stock shares. At such time those retired shares (proper terminology?) can be allocated to the 3 new ee's. Can Plan Sponsor issue additional stock for allocation? or is the TPA correct? I can't seem to find guidance on this matter. Thoughts, comments and resources would be much appreciated. Thank you!