Whether to Establish an ESOP Not all companies are fit for an ESOP. The decision to create an ESOP is a significant one, and it requires careful evaluation beyond enthusiasm or the appeal of tax deferral. Two critical considerations stand out when evaluating whether to move forward: (1) independence of the valuation expert, and (2) whether the company is operationally, financially, and structurally suited f ...

And the Trump Administration’s Freeze This article is the latest installment of QuickRead articles on ESOP regulations. Specifically, it focuses on the request, and status thereof, for the Department of Labor to clarify “adequate consideration” for the valuation of entities held in ESOPs. This article is the latest installment of QuickRead articles on ESOP regulations.[1] Specifically, it focuses on the req ...

Part II For purposes of valuing an ESOP, the question of what is “adequate consideration” has vexed the author and other BV practitioners. In this article, the author shares an update on the DOL’s response to earlier inquiries. Her two previous articles published in QuickRead detailed the earlier efforts to clarify what constituted “adequate consideration” for the valuation of entities held in ESOPs. On Oct ...

Federal Rules and Regulations Governing ESOPs Business valuation reports of employer’s securities owned by ESOPs are subject to review by plan fiduciaries, government agencies, and IQPAs auditing the ESOP’s financial statements. Each of these readers have their own responsibilities to the participants and beneficiaries of the plans. This article will examine the federal rules and regulations governing ESOPS ...

Awaiting Proposed ESOP Regulations In April of this year, the author wrote “Adequate Consideration” Defined? for QuickRead. Since then, the author has regularly checked for updates from the Department of Labor (DOL) with respect to the definition of adequate consideration as it pertains to section 408(e) of the Employee Retirement Income Security Act of 1974 and employee stock ownership plans. Although ther ...

A Legislative Approach? In April of 2023, the United States Department of Labor (DOL) committed to move forward with a regulation to clearly detail “adequate consideration” in section 408(e) of the Employee Retirement Income Security Act of 1974 (ERISA). For decades the DOL has utilized litigation versus heeding Congress’s edict to enact regulations regarding adequate consideration and it seems as though ac ...

(Part I of III) This article about excess compensation is comprised of three-parts. Part one summarizes the facts regarding Clary Hood, Inc. v. Commissioner and the U.S. Tax Court’s holding. Part two of this series describes the Tax Court’s analysis and conclusions regarding the reasonableness of compensation issues. Part three describes the Tax Court’s analysis and conclusions regarding Section 6662 penalt ...

An Army veteran and former air traffic controller who recently was still piloting his own plane to work, Richard Salmen has become the CFP Board's new chairman.  With his choice, the board has returned a working financial planner to lead the nation's largest and most powerful planning nonprofit. To read the full article in FinancialPlanning, click: High-Flying Army Vet Becomes CFP Board Chairman. ...

The future of the fiduciary rule is up for grabs, again, and clients, advisers, and firms are jumping in to make their voices heard at a crucial moment.  Via a public commentary board, the Department of Labor is hearing feedback on whether it should make changes to the fiduciary rule and delay the regulation's second stage of implementation.  Scroll through to see some of the most passionate and insightful ...

Analysis of Unaudited Financial Statements—Who and How? There has been much discussion within the ESOP community about the “settlement” and its reverberations. As readers are likely aware, the settlement in question refers to the 2014 settlement agreement between GreatBanc Trust Company and the United States Department of Labor (DOL). The terms of the settlement include, among other things, an agreement con ...