leveraged esop and 2002

[Tom Poje]

I am working with a document that limits contributions to the HCEs in order that they receive no more than 1/3 of the contribution. It dawned on me that since the 415 limit will now be 100% rather than 25% of copensation per individual, does it make sense to have that feature in the document? I suppose if you were going to have mega-forfeitures or mega-dividends it might make a difference, but any other scenarios, or am I missing something.

[RLL]

Won't the $$ limit on 415 annual additions continue to make the 1/3 rule an issue for a C corp leveraged ESOP?

Dividends wouldn't be an factor except in an extraordinary situation when the IRS might attempt to "recharacterize" dividends as employer contributions.