415 Leveraged ESOP

[Guest AG]

How is limit calculated -

assumptions for 1999

principal repaid 60,000

interest repaid 110,000

total repaid 170,000

12/31/99 value of stock released 90,000

Less than 1/3 allocation goes to HCE's

when I calculate 415 limits (specifically the 30,000 limit) do I use the 60,000, or the 90,000?

I know the 90,000 is used for participant accounts. However, in doing so, I have an individual who exceeds 30,000. But if I use the 60,000 for 415 testing, the participant is under the 30,000.

thanks.

[RLL]

Use $60,000 for determining 415 annual additions, per IRC Section 415©(6).

Also, the allocations under a leveraged ESOP should be in shares (or other non-monetary units), as required under Reg. Sec. 54.4975-11. Accordingly, the $90,000 current fair market value of the released shares is not a relevant factor in determining the 1999 allocation.

[This message has been edited by RLL (edited 01-21-2000).]

[Guest AG]

Thank you very much.

I believe I misphrased my original message.

Can I rephrase it as follows:

The 60,000 in my example is used for 415 testing per IRC 415©(6). Separately, the shares released from suspense are based upon the formula used, (P only method or P and I method). The fact that in a particular year, an individual may be allocated from suspense, as a result of the release, shares whose current value exceeds 30k is irrelevant to 415 testing.

I appreciate your help.