Distribution from ESOP

[MarZDoates]

I know absolutely nothing about ESOPs but was asked a question about income tax withholding on a distribution from an ESOP:

Plan distributed (lump sum) shares to terminated participant. Corportion purchased the shares back from the participant. Is this subject to 20% income tax withholding? :confused:

Thanks.

[QDROphile]

No withholding on a distribution that is solely employer securities. Look at the IRS model tax/rollover notice form.

The purchase of the distributed shares is another transaction, it is not a distribution.