Compensation Strategies Group, Ltd.
Nova 401(k) Associates
Nicholas Pension Consultants
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|IRS Says Leveraged ESOP Contributions Deductible in Addition to Other Contributions|
National Center for Employee Ownership [NCEO]
June 11, 2004
For many years, there has been uncertainty about whether contributions to repay the principal on an ESOP loan are deductible in addition to contributions made to 401(k), profit sharing, and other defined contribution retirement plans. Now the IRS has issued a private letter ruling that states, 'Section 404(a)(9)(A) [of the Code] allows a separate deduction for contributions applied by an ESOP to the repayment of principal of a loan.'
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