Plan with Employer Stock

[stevena]

What is form 11 K and do all plans with employer stock have to file it with the SEC? I did a search on benefitslink as well as the SEC, but cannot find explicit instructions as to whether all plans need to file it annually.

My plan is a 401(k) with employer stock offered to employees through all sources (through deferrals and match)

thanks!

[four01kman]

You need to consult with a securities attorney -- sooner rather than later.

[Kirk Maldonado]

I second the recommendation by four01kman.

If a participant lawsuit is filed before the plan is cleaned up, the employer will lose big time, particularly if the stock price has dropped.

People are usually most concerned about the penalities for non-compliance with the Internal Reveue Code and ERISA. In this situation, the penalties for noncompliance with securities laws can dwarf the worst penalties that could ever be imposed under ERISA or the Internal Revenue Code.

I was involved in one case where we discovered and cleaned up the problem before anything hit the fan. If the problem hadn't been discovered until a year later, the penalties at that time would have exceeded the value of the company.

[stevena]

I wasnt clear enough I guess.

We are a TPA, this is a clean plan already, we are taking it over. I am sure they file everything they are supposed to.

However, I have never worked on a plan with employer stock.

there is a SEC attorney involved already, and a CPA firm for the audit. (we have a meeting with him next week) I am just trying to learn about the requirements for this type of plan. Just for my own knowledge.

thanks!

[Kirk Maldonado]

I'm not sure why you are so positive that they've done everything correctly. My presumption, based on over 20 years of experience, would be the exact opposite.

There's an easy and free way to find out whether they've been doing things right. Check on the SEC's website to see if they have been filing the Form 11-Ks.

[stevena]

The plan is only just now deciding that they want to add employer stock as an option. There is an SEC attorney they have just hired, as well as a bank attorney. I am sitting in on the conference call at the end of the week. I just wanted some background so that I have some kind of familiarity with what the SEC attorney is saying, thats all. So I would not be completely unfamiliar with what he is saying.

Could you refer me somewhere that I could research the requirements for a plan with ER stock? (I am looking for participant disclosure requirements as well as filing requirements). This is a really small plan, just now hitting 100 eligible participants. So I am not sure if all the filing requirements apply.

I have been searching the web all week, but I cant find anything. Some articles about how profit sharing plans do not have to limit employer stock to 10%, some articles about how it is a horrible idea to have er stock in a plan, thats about all I can find.

I would appreciate any input.

Thanks.

[QDROphile]

BNA has a porfolio on the subject. You will see a familiar name in it, too!

[stevena]

thanks....i looked on the website. how about a suggestion for somewhere i can look for free???

thanks for the suggestion.

[QDROphile]

Then take a look at SEC Release No. 33-6188 (1980). It might make you appreciate products that include explanation and anlysis.

[stevena]

I appreciate, I envy, I am humbled by......

I just cannot afford.....

[Demosthenes]

Couple of starter locations.

National Center for Employee Ownership

http://www.nceo.org/

Financial Accounting Standards Board

http://www.fasb.org/

Search for Employee Stock Option Plans

If you really want the nuts and guts, you may have to go to the paid services, but this will at least give you a flavor

P.S. Are you in the Northeast or did you make the transition to the South?

[Guest TGeer]

Get a BNA trial subscription. Thay have good stuff, and Kirk Maldonado is very good.

Make sure you sya "I don't do SEC compliance" at the beginning of the call.

[stevena]

I just got here to Carolina from Boston. Love it in the South. And am much warmer.