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The Importance of an ESOP Distribution Policy
Blue Ridge ESOP Associates Link to more items from this source
Sept. 14, 2017

"The plan document typically will include the form, method and timing options the plan will allow -- cash vs. stock, lump sum vs. installments. A distribution policy will specify how distributions will be paid. For example, a distribution policy may read: 'Upon death, disability, or retirement, distributions will be paid out lump sum in cash and commence no later than one year following the event.' There are many things to consider when drafting a distribution policy -- repurchase liability, cash flow projections, future transactions, corporation status, benefit levels and compliance testing issues. All of these will impact how you structure your policy to meet your company's objectives."

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