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  1. Hello, While the issue does not come up exactly in the context of an ESOP, the administration of the Plan/Fund is similar enough to ask the question here. Can a Plan Administrator reallocate the unvested shares of an employee who has currently left the employ of the company to other participants before a "forfeiture" event (i.e. 5-year break in service or distribution)? The idea is to keep the account "open" and accounted for, but have the shares reallocated. In the event the employee comes back before a forfeiture event, the shares would be reissued/contributed/reallocated to the returning employee. The Volume Submitter Plan this fund is based off of states that the Plan Administrator will continue to hold the undistributed, non-vested portion of the account of a participant until a forfeiture event, so I believe that as the plan is written, the stock would need to remain in the account and not be reallocated. However, can the plan be amended to state that only the account will remain "on file" but allow for the stock to be redistributed? On a similar note, can a plan be amended to shorten or do away with the 5-year break in service requirement (other than by allowing a distribution)? I am pretty certain that one cannot because the ERISA Outline Book (2016) makes no mention of it; because seems IRC Sec. 411 requires a 5 year period; and because of the issues of cost basis and the deduction of additional contributions (to make up for growth-or is growth even accounted for during the break in service period?), but my assigning attorney is pretty certain that the Plan can be amended to shorten the time before forfeiture. Full Disclosure: I am a summer associate, but I intend to work in the Benefits practice and have found this forum helpful. I would appreciate some guidance as to additional resources I can look at. Thanks!
  2. An ESOP sponsor is interested in closing down a long-term ESOP plan. If the company borrows the funds to repurchase the shares from participants, is the interest on that corporate loan deductible?
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