What is the proper way to value allocated stock in an ESOP when you ar

[Guest chambeao]

I know that it is clear under the safe harbor rules that the 3% contribution can be made to a plan other than a 401(k) plan - such as an ESOP. But here is my question ... If the 3% contribution is made to a leveraged ESOP, and the contribution is used to repay the ESOP loan with stock being allocated from the suspense account to the employee accounts, what amount of stock would be required to be allocated to the employee account to meet the 3% rule? This becomes an issue in the leveraged ESOP, since the cash contribution made to the plan will go toward payment of interest on the ESOP loan as well as principal. Stock is allocated from the suspense account to the employees' accounts based on the amount of principal paid. My concern is that it could be possible for a 3% cash contribution to be made to the ESOP, but with a part of that amount being used to pay interest, it is possible the stock released from the suspense account and allocated to the employee accounts might not have a fair market value of 3% of compensation. Is it sufficient that the 3% contribution was made, even if the employee does not get stock valued at 3% of pay allocated to his or her account?