Adopting pre-approved ESOP document

[Belgarath]

Gosh I'm glad I don't do ESOP's. But we do get some questions now and then from referral sources where we try to provide some general guidance on what a client might want to discuss with their ESOP legal counsel or TPA, etc.

Along those lines - now that pre-approved ESOP documents are available, I have a question about the timing of adopting one. An employer has an ESOP, which did receive a determination letter several years ago. The CPA wants to know if a pre-approved ESOP document has an IRS approval date in 2020, is it a "late" adoption if adopted currently? In other words, does the normal 2-year window apply? I'm thinking that as long as timely interim amendments were adopted, they should be ok - relying on the prior determination letter until they adopt the new pre-approved plan at whatever date.

Pardon my ignorance on this issue, as I've frankly paid no attention to such ESOP questions - they don't apply to our business except tangentially for questions such as this that sometimes come across my desk.

Thanks in advance.

[Paul I]

The short version is the pre-approved ESOP documents follow the same path through restatement cycles and and interim amendments as pre-approved 401(k) documents, so you pretty much know how the process works.

They can adopt a pre-approved ESOP now along with any interim amendments applicable to the pre-approved documents.  To cover themselves for the time period prior to adopting the pre-approved ESOP, they could consider adopting any interim amendments needed to have been made to the existing plan document.

[Belgarath]

Thanks Paul. 

[ESOPMomma]

7 hours ago, Belgarath said:

Gosh I'm glad I don't do ESOP's.

I LOVE ESOPs! You can send them all my way.   Paul's comments are spot on.