Recent Articles

Pitfalls In Selling Stock To Fund ESOP Repurchase Obligations - Part II

Sheppard Mullin
April 07, 2008 20:44

In the first article on this subject that we recently posted, we considered the administrative and fiduciary issues that arise when an ESOP sells company stock to the company to fund its benefit distributions.  The fiduciary issues under the Employee Retirement Income Security Act of 1974, as...

Pitfalls In Selling Stock To Fund ESOP Repurchase Obligations - Part I

Sheppard Mullin
March 27, 2008 20:28

ESOPs often choose to make benefit distributions in the form of cash, rather than in company stock. Some of these ESOPs obtain the necessary cash by selling company stock to the company. This sale transaction raises two fiduciary issues under the Employee Retirement Income Security Act of 1974, as...

ESOPs Impacted by Landmark U.S. Supreme Court Case

Sheppard Mullin
February 26, 2008 20:09

The pension plan world is abuzz with last week's U.S. Supreme Court (the "Court") decision in a pension plan case, LaRue v. DeWolff, 552 U.S. ____ (2008).  We don't get many decisions by the Supremes in the pension area, so it's worth some focus.  We will give just a brief...

Treasury Proposes New ESOP Regulations And Invites Public Comment

Sheppard Mullin
February 15, 2008 19:54

In January 2008, the IRS published proposed regulations ("Proposed Regulations") under the new ESOP diversification rules of Section 401(a)(35) of the Internal Revenue Code ("Code").  The Proposed Regulations could impact several ESOP provisions of the Code, including: the...

House Ways and Means Proposes New Restrictions on S Corporation ESOPs

Sheppard Mullin
November 29, 2007 18:55

H.R. 3970 introduced by Hon. Charles Rangel on October 25, 2007, includes a Section 3701 that would add Section 409B to the Internal Revenue Code. The new provision would create an additional income tax on the holder of synthetic equity (as defined in Section 409(p)). The new rule would...

Timing Problems and Solutions for ESOP Diversification Elections

Sheppard Mullin
February 20, 2007 17:34

ESOP DiversificationThe January 1, 2007 effective date of the new investment diversification rules for ESOPs with publicly traded stock got us thinking about the diversification rules that extend to companies whose stock is not publicly traded. These rules include some rather difficult timing...

Thoughts on the Final 409(p) Regulations

Sheppard Mullin
February 05, 2007 22:58

In December, the IRS published in final form the long-awaited regulations (“Final Regs”) under Internal Revenue Code (“IRC”) Section 409(p). These regulations were first published in proposed form in 2003, and then again as proposed and temporary regulations in 2004. The...

Sheppard Mullin Announces New ESOP Blog

Sheppard Mullin
October 19, 2006 13:26

We are pleased to announce that Sheppard Mullin and Larry Goldberg  have launched a new blog on Employee Stock Ownership Plans (ESOPs). You can access it at http://www.esoplawblog.com.  A blog is an online web journal. You will now be able to access up-to-date information on  ESOP...

Pension Protection Act of 2006 ("PPA")

Sheppard Mullin
October 18, 2006 01:00

While you may have already seen general descriptions of the PPA, this ESOP Blog focuses on the PPA provisions that relate to ESOPs, and provides some planning considerations for ESOP companies. 1. New, Faster Vesting for ESOPs – Contributions made to a defined contribution plan for...