Can a participant's benefit in an ESOP be diversified into his/her profit sharing plan of same employer?

[Guest jhilliard]

A participant who satisfys diversification criteria in an ESOP wants to know if they can transfer funds into the PS plan for diversification purposes.

I am not at all familiar with ESOPs so I ask for your point of view.

Thanks in advance for your thoughts.

[QDROphile]

If the terms of both plans allow and the PS plan meets the investment standards, you may transfer. If the ESOP has a money purchase plan element, the IRS says you have to resurrect the joint and survivior annuity. If you diversify by distribution and roll the proceeds of the distribution to the PS plan you could scrape of the money purchase baggage.

[stephen]

Another option would be to set up segregated accounts through the Profit Sharing Plan broker using the same funds that are offered in the other plan if "the PS plan meets the investment standards."