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FACTS: ESOP plan effective 01/01/2012, Cycle D (submission period ending 01/31/2015). This plan is not a "true" ESOP. It has no loans and no shares contributed. The Employer made a cash contribution in 2012 with the intention of buying stock, but never ended up doing so. The only accounts in the plan are cash accounts (profit sharing). The Employer was talked into this plan by their prior TPA and has since terminated their services and has hired us to takeover and terminate this ESOP. In addition, the client has a 401k plan that is effective 11/01/1984 that we are also taking over and this plan will be continuing. The Employer wishes to terminate the ESOP effective 08/01/2014.

Concern: I'm concerned that the ESOP document is not updated according to the current cumulative list (2013) since the plan is effective 01/01/2012 (adopted in December 2012). In addition, I do not believe the plan was submitted for Determination Letter off-cycle (new plan exemption). So no DL has ever been issued. My concern is what if the plan were to be audited?

Question: Rather than restating to another ESOP document for Cycle D, can we restate the plan to a "profit sharing" plan on a pre-approved PPA Document effective 01/01/2014 and then terminate the plan effective 08/14/2014?

Or should I not worry about restating the plan and just do a board resolution to terminate it and be done with it?

Any suggestions or thoughts are appreciated. We do not provide document services for ESOP so I am way out of comfort zone here.

Thank you!

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This is not just about document updates. You have some legal issues involved in the arrangement that you have not mentioned and that have a bearing on what should be done. Given your inexperience with ESOPs, someone else should be hired to provide direction and you should not proceed yourself based on responses that you might get on this Board, however good they may be.

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Sounds like what you have is a profit sharing plan that never applied for a determination letter.

If you can convince yourself that there's probably nothing inherently wrong with the existing plan document why not see if your client wants to amend and restate on a PPA pre-approved profit sharing plan document and go on with life?

If your client wants review by ERISA counsel that's certainly an option.

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