401k match with private company stock?

[Guest KathyL]

Looking for the following:

1. Any good resources to obtain information about adding an employer match an existing 401k plan -- pros, cons, costs, common features, things to watch out for.

2. Same as above but need specifics about employer match in the form of company stock.

3. Does anyone have any experience with an employer match with company stock if the company is still private? High probability that the company will go public eventually, but no one knows when. Can this be done?

Thanks for your help.

Kathy

[Guest ERead]

Sounds like you're looking toward a KSOP ( an ESOP with 401(k) provisions). I haven't actually worked with a plan that used employer stock as a match, but I know that it is possible.

Good luck

[Guest BobParks]

I've saw a k plan where the employer matched with stock in a company that wasn't traded.

The big issue was valuation of the company stock. The appraisal was more expense and trouble than the plan was worth from an HR and income tax point of view.

[LCARUSI]

I have a comment relating to making the match in company stock.

As you know, a Sponsor has a fiduciary obligation to invest plan assets prudently (assuming this obligation is not passed along to participants in a 404©Plan). So the Sponsor should be prepared to demonstrate that mandatory investment of the match in conmpany stock is in fact a prudent investment

[Guest Beavis]

Also keep in mind that since the stock is not readily tradeable, the employer will be required (at the option of the participant) to buy back shares from participants who take distributions from the plan.

That could prove to be a major cash obligation in later years if the company does not go public.

[Jon Chambers]

Another consideration is whether the number of employees in the plan forces the non-publicly traded stock to be registered with the SEC. This a securities law question that I'm not qualified to address, but if it applies, the costs and trouble of the SEC registration, and the disclosure implications for the plan would likely make the proposed approach untenable.