409(h)(4) vs 54.4975-7(b)(11) (Put option)

[Guest tmills]

I'm trying to understand the distinction between the 409(h)(4) put option period of at least 60 days in 2 succeeding years and the -7(b)(11) requirement of at least a 15 month put option. They both start the day the stock is distributed in year 1. The 60 day one then springs to life again for another 60 days after the valuation is complete in year 2 (we says statements are distributed to participants). Assume all that happens on the same day every year, June 1. So you have a put option that runs through the end of July in year 1 and then may go dormant until June 1 of year 2 and then runs again through the end of July. Under this scenario, a total of 14 months. This option periods could run longer but only have to be at least 60 days.

The -7(b)(11) option is exercisable at least during a 15 month period. How do they work together, or do they? Seems like the 15 month period wouldn't really work for the period of time after a year end valuation date unless everything gets done very quickly. Not my normal experience. You couldn't exercise the option at the previous year's price in the new year. So just use whatever is longer? I don't recall ever seeing a document using the -7(b)(11) language. They all (including ours) seem to use 409(h)(4). As always, thoughts are appreciated.

[RLL]

The ESOP regulations were adopted in 1977. The put option provisions of section 409(h) were added to the IRC in 1978. Accordingly, the inconsistent provision of the regs (the 15-month put option period) was superseded and has not been applicable for the last 30 years.

[Guest tmills]

Thanks, I was hoping that was the case.