Change in Payment Period?

[beartd]

Our Esop plan doc requires payment in lump sum or in a period certain not to exceed 5 years. We don't have a distribution policy. Can an participant who has elected a 3 year distribution period now extend that payment period to 5 years by executing a new distribution form?

Our plan does not say one way or another.

However the requirement for a "payments over a period certain" could be interpreted as not being able to be changed. Although the new 5 year period would also be a period certain...

I can't find where the change would be a violation of any ERISA / ESOP distribution rules.

[BeckyMiller]

This is why we frequently suggest that ESOPs have distribution policies.  Many plans are written to say that distributions will commence not later than or made in installments over a period not longer than....  So, the Plan Fiduciary needs to demonstrate consistent and uniform policies in applying these open ended concepts.  Sounds like you have already checked the plan and found it not helpful and you don't have a policy.  If this is the first time this has happened, this may be the time to start drafting a set of distribution policies.  But, I wouldn't do that without some good legal advice.

[CassandraS]

On 4/3/2017 at 6:14 PM, BeckyMiller said:

This is why we frequently suggest that ESOPs have distribution policies.  Many plans are written to say that distributions will commence not later than or made in installments over a period not longer than....  So, the Plan Fiduciary needs to demonstrate consistent and uniform policies in applying these open ended concepts.  Sounds like you have already checked the plan and found it not helpful and you don't have a policy.  If this is the first time this has happened, this may be the time to start drafting a set of distribution policies.  But, I wouldn't do that without some good legal advice.

Thank you for this BeckyMiller.

[CarloCarmichael]

On 2017/04/04 at 3:44 AM, BeckyMiller said:

This is why we frequently suggest that ESOPs have distribution policies.  Many plans are written to say that distributions will commence not later than or made in installments over a period not longer than....  So, the Plan Fiduciary needs to demonstrate consistent and uniform policies in applying these open ended concepts.  Sounds like you have already checked the plan and found it not helpful and you don't have a policy.  If this is the first time this has happened, this may be the time to start drafting a set of distribution policies.  But, I wouldn't do that without some good legal advice.

Great