Allocation of declared dividends

[Guest gnappi]

An esop declares a dividend of $1 per share for a virtually new plan. let's assume there are 100,000 share and $100,000 is deposited into the plan's other investment account as a dividend. this was done so as to have cash available to pay out soon to be retirees.

since only 10,000 shares are currently allocated in the plan and 90,000 shares are still unallocated, can the declared dividend be allocated among the participants currently in the plan or does $90,000 need to be accounted for separately and placed in some sort of unallocated dividend account?

thanks

[stephen]

Check the plan document as it should address the allocation of dividends on allocated and unallocated shares.

Often, the dividend on the allocated shares will be allocated on the basis of the allocated shares. However, this is not necessarily the case.

Meanwhile the dividend on the unallocated shares can be used to pay on the note (for c-corps), allocated based on compensation, or on some other basis.