On August 9, the IRS issued a news release, IR-2023-144, warning taxpayers and advisors of “numerous compliance issues” with ESOPs, such as “valuation issues with employee stock,” “prohibited allocation of shares to disqualified persons,” “failure to follow tax law requirements for ESOP loans causing the loan to be a prohibited transaction” and “promoted arrangements
Plan Defends Valuation of Accounts in Midst of COVID-Related Market Volatility
A 401(k) plan and its administrators are defending the administrator’s decision to require a special valuation of former employees’ account values, given extraordinary market changes due to the COVID-19 pandemic. Under the terms of the plan at issue, when a former employee seeks a distribution of his or her plan account, the account is typically
Critical Qualified Plan Fiduciary Issues For Employers To Consider In Light Of Covid-19
With the business disruptions and market turbulence being wrought by COVID-19, many employers sponsoring qualified retirement plans are facing key decisions about their 401(k), profit sharing, defined benefit, and cash balance plans. From considering potential cost-savings measures such as suspending safe harbor contributions to a 401(k) plan and/or discretionary contributions to a profit sharing plan,
U.S. Supreme Court’s Rejection of Moench Presumption: Fifth Third Bancorp. vs. Dudenhoeffer
Background
Fifth Third Bancorp (the “Company”) is a public company which maintained a 401(k) plan containing an employee stock ownership plan (“ESOP”) component. The Company matched employee contributions by contributing employer stock to the ESOP, which invested its funds primarily in Company stock. When the Company’s stock value fell, former employees and ESOP participants filed