Stock Dividend

[nancy]

I have a KSOP that recently paid a stock dividend. I'm unable to find any language in the document which addresses what to do with the stock dividend on shares in suspense. The document does state that a cash dividend on suspense shares can be used to pay the loan or purchase additional stock. We have employees who are waiting to buy stock with their deferrals. Would it be reasonable to do this? Any suggestions?

[RLL]

Hi nancy ---

A stock dividend is treated similar to a stock split. For example, if a shareholder owns 100 shares and receives a 5% stock dividend, the 100 shares have become 105 shares.

In your KSOP, the shares received as a stock dividend "follow" the shares with respect to which they are paid. If the suspense account holds 100 shares and a 5% stock dividend is paid, the 100 shares have become 105 shares. The additional 5 shares are added to the suspense account and allocated to participants' accounts as loan payments are made and shares are released from the suspense account.