Mandated ESOP distribution

[Guest D Evan]

After being terminated from a privately held company with an ESOP plan, was told because of the termination the plan manadated distribution within sixty days of the end of the plan year. Plan year ended November 30, 2001 therefore by January 31, 2002 I had to notify them with how the funds were to be distibuted. They now tell me that I'll have to wait another sixty days until after an auditor calculates a new share price. In my opinion the reason for the wait is because the share price is likely to go down. Can they legally wait when the plan MANDATES distirbution?

[stephen]

If you did not receive your distribution prior to the last day of the plan year the plan is correct in waiting until the 11/30/01 allocation is complete.

This insures that all persons receiving distributions get their share of any earnings or losses that accrued through the end of the plan year.

Keep in mind if the share price goes up you will receive a larger distribution.

[Guest D Evan]

Are you saying it's proper for them to wait even though the plan mandates distribution with in 60 days?

[Guest D Evan]

Because I worked enough last year to qualify for another year vesting do they have to give me additional shares for last year also?

[stephen]

Generally, yes. The ESOP value for the allocation date cannot be determined until after the share value is calculated. For privately held companies this can rarely be completed within 60 days after the end of the plan year.

[stephen]

If you met the vesting requirements for last year you will gain another year of credit for vesting. And therefore move up on the vesting schedule.

In some instances you could also recieve additional contributions. Does the plan require you be there on the last day to receive a contribution? Do you meet the plan definition for normal retirement or early retirement (if available)?