Plan did not offer diversification for 55 year olds w/ 10 years of par

[Guest EBC]

Any suggestions on best method to correct this?

[RLL]

Correct ASAP under one of the IRS plan qualification defect correction programs. These are applicable to ESOP diversification, as compliance with IRC Section 401(a)28)(B) is a qualification requirement for ESOPs.

Manner of correction will depend on specifics; how many years are involved? has stock value increased or decreased? how many participants involved? etc., etc. But you must make the eligible participants "whole" in order for there to be an appropriate correction.

[This message has been edited by RLL (edited 05-26-2000).]

[Guest EBC]

For 1 participant, 10 years passed since he made the 55/10. He terminated on the last day of the prior plan year (12/31/99). There are 8 otheres who made 55/10 in the past 3 years.

Can you elaborate on what you mean by "making the participants whole"?

Thanks for your insight.

[Guest hapa123]

"Making participants whole" means restoring to such participants the benefits and rights they would have had if the failure had not occurred.