The February 1, 2012 Employee Ownership Update is online and discusses the following:
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Employee Ownership in the 2010 General Social Survey
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Survey Shows ESPPs Remain Key Part of Equity Strategies
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Principal 10 Best Companies for Employee Financial Security
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Employee Ownership and Charity
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Employee Ownership Conference Filling Up
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A New Approach to Stock Ownership
The Update discusses the employee ownership takeaways from the 2010 General Social Survey. The level of employee ownership has remained constant since 2006 and that employee ownership results in lower turnover and less layoffs:
The 2010 General Social Survey, one of the largest and longest-running national surveys, found that the percentage of employees saying they have ownership in the companies where they work has been stable since 2006 at 17.5% of the private sector workforce. Among those who work for organizations that have stock, 36% report owning shares. The percentage of respondents saying they have stock options declined slightly, from 9.3% of the private sector workforce in 2006 to 8.7% in 2010. The GSS also examined voluntary and involuntary turnover. Less than 3% of people who say they own stock in their companies reported being laid off in the last 12 months, compared to 12% of those who do not own stock. In addition, while 24% of the non-owner employees intend to look for new jobs in the near future, only 13% of employee-owners do.
Here is a link to a tool that will allow you to search the results of the General Social Survey (GSS) data from 1972 - 2010
To put the information in perspective, here is our discussion of the 2007 results:
According to an ESOP Association press release, the Employee Ownership Foundation released data on shared capitalism programs in the US. The press release defined shared capitalism as "broad-based employee, current or deferred, stock compensation programs, such as ESOPs, stock purchases, stock options, gainsharing, profit sharing, and bonus programs." The data was collected from the General Social Survey (GSS), which is a survey that is conducted with a face-to-face interview by the National Opinion Research Center at the University of Chicago. The press release summarized the findings as follows:
"According to the results, out of 114 million people in the US who work in the private sector,17.5% of employees own company stock, about 20 million employees, and 9.3% hold stock options, approximately 10 million employees. The number of employees who reported profit sharing, gainsharing, owning company stock or holding stock options was 46.7%, which is an increase over the 2002 GSS finding of 43.1%. While the data reflect a slight drop from the 2002 results which showed that 21.2% of employees owned company stock and 13.1% held stock options, the numbers are still impressive when one takes into consideration that almost 50% of the individuals working in the private sector are involved in some sort of shared capitalism program."
Tax break on businesses sold to employees takes step forward provides an update on the status of Iowa's Employee Stock Ownership Plan (ESOP) Initiative for encouraging interested Iowa business owners to Sell to an ESOP. The bill was approved by a subcommittee of the House's Ways and Means Committee and will now be considered by the full committee. The article discusses the fiscal impact of the legislation:
The Legislative Services Agency predicts the bill once passed could cost the state $1.7 million in the coming year. $1 million of that would come from additional state spending to assist companies in making the transition to an employee-ownership structure. The tax break for the owners selling their business — an exemption from individual income taxes on the capital gains earned on the sale — would cost the state the other $700,000 in 2013. That loss in tax revenue would rise to $900,000 by 2016, according to the fiscal projection.
Here is the text of Iowa House File 2085 – Iowa’s ESOP Initiative (formerly HSB 516):
HOUSE FILE
BY COMMITTEE ON ECONOMIC
GROWTH/REBUILD IOWA
(SUCCESSOR TO HSB 516)
A BILL FOR
1 An Act relating to employee stock ownership plans by
2 encouraging the adoption of such plans by Iowa corporations,
3 creating an individual income tax exemption, making an
4 appropriation, and including retroactive applicability
5 provisions.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
TLSB 5250HV (2) 84
mm/sc
PAG LIN
1 1 DIVISION I
1 2 ESOP FORMATION ASSISTANCE
1 3 Section 1. EMPLOYEE STOCK OWNERSHIP PLAN ASSISTANCE AND
1 4 PROMOTION.
1 5 1. There is appropriated from the general fund of the state
1 6 to the economic development authority for the fiscal year
1 7 beginning July 1, 2012, and ending June 30, 2013, the following
1 8 amount, or so much thereof as is necessary, to be used for the
1 9 purposes designated:
1 10 For providing financial assistance, including establishment
1 11 of a loan program, and technical assistance, marketing, and
1 12 education to businesses interested in establishing employee
1 13 stock ownership plans and for procuring the services of an
1 14 independent contractor with expertise in the formation of
1 15 employee stock ownership plans:
1 16 .................................................. $ 1,000,000
1 17 Notwithstanding section 8.33, moneys appropriated pursuant
1 18 to this section shall not revert but shall remain available to
1 19 the economic development authority for the purposes designated
1 20 until expended. Notwithstanding section 12C.7, subsection 2,
1 21 earnings or interest on moneys appropriated pursuant to this
1 22 section shall be retained by the economic development authority
1 23 and used for the purposes designated until expended.
1 24 DIVISION II
1 25 CAPITAL GAIN DEDUCTION FOR SALE TO AN IOWA ESOP
1 26 Sec. 2. Section 422.7, subsection 21, Code Supplement 2011,
1 27 is amended by adding the following new paragraph:
1 28 NEW PARAGRAPH. e. (1) To the extent not already excluded,
1 29 the net capital gain from the sale or exchange of employer
1 30 securities of an Iowa corporation to a qualified Iowa employee
1 31 stock ownership plan when, upon completion of the transaction,
1 32 the qualified Iowa employee stock ownership plan owns at least
1 33 thirty percent of all outstanding employer securities issued
1 34 by the Iowa corporation.
1 35 (2) For purposes of this paragraph:
2 1 (a) "Employer securities" means the same as defined in
2 2 section 409(l) of the Internal Revenue Code.
2 3 (b) "Iowa corporation" means a corporation whose commercial
2 4 domicile, as defined in section 422.32, is in this state.
2 5 (c) "Qualified Iowa employee stock ownership plan" means an
2 6 employee stock ownership plan, as defined in section 4975(e)(7)
2 7 of the Internal Revenue Code, and trust that are established
2 8 by an Iowa corporation for the benefit of the employees of the
2 9 corporation.
2 10 Sec. 3. RETROACTIVE APPLICABILITY. This division of this
2 11 Act applies retroactively to January 1, 2012, for tax years
2 12 beginning on or after that date.
2 13 EXPLANATION
2 14 This bill relates to employee stock ownership plans.
2 15 Division I of the bill provides for an appropriation of $1
2 16 million to the economic development authority for the purpose
2 17 of providing financial assistance, including the establishment
2 18 of a loan program, and technical assistance, marketing, and
2 19 education to businesses regarding the formation of employee
2 20 stock ownership plans.
2 21 Division II of the bill provides for an exemption from the
2 22 computation of the state individual income tax of the net
2 23 capital gain from the sale or exchange of employer securities
2 24 of an Iowa corporation to a qualified Iowa employee stock
2 25 ownership plan if, upon completion of the sale or exchange,
2 26 the qualified Iowa employee stock ownership plan owns at least
2 27 30 percent of all outstanding employer securities issued
2 28 by the Iowa corporation. For purposes of the exemption,
2 29 "employer securities" means the same as defined in section
2 30 409(l) of the Internal Revenue Code, "Iowa corporation"
2 31 means a corporation whose commercial domicile is in Iowa,
2 32 and "qualified Iowa employee stock ownership plan" means an
2 33 employee stock ownership plan and trust that is established by
2 34 an Iowa corporation for the benefit of the employees of the
2 35 corporation.
3 1 Division II of the bill applies retroactively to January 1,
3 2 2012, for tax years beginning on or after that date.
S Corporation ESOP companies are not subject to income taxation (federal and most states), increasing cash flow and providing the company with a competitive advantage. Let me say that first part again. S CORPORATION ESOP COMPANIES ARE NOT SUBJECT TO INCOME TAXATION!
How are S Corporation ESOP companies not subject to income taxation?
S corporations pass through their corporate income to their shareholders for federal income tax purposes. The shareholders receive an IRS Form K-1 and report the flow-through of the income on their personal tax returns based on their individual federal and state income tax rates.
As a result of the Small Business Job Protection Act of 1996, ESOP trusts are eligible S Corporation shareholders. The new S Corporation shareholder, the ESOP trust, is a tax exempt entity not subject to income taxes. The Taxpayer Relief Act of 1997 and IRC Section 512(e) repealed the application of unrelated business taxable income (UBTI) for ESOPs effective for taxable years beginning on or after January 1, 1998.
This is a very powerful tax advantage that provides the cash flow to fund the purchase of the company from the selling shareholders. Once the debt has been paid the additional cash flow provides a company with a competitive advantage over their non-ESOP counterparts.
Is this an unintended loophole in the Internal Revenue Code?
If you review the above-mentioned legislation you will see that the ESOP tax benefits are specifically cited in the legislation and are not an unintended consequence. Congress considers Selling to an ESOP to be good public policy and has specifically created this benefit to further incentivize ESOPs and employee ownership.
How can the government afford the ESOP tax benefits?
It is also important to note that the tax advantages are essentially a tax deferral. An S Corporation ESOP company "increases tax collections from both employees and employers", as the additional value created by the tax savings generates additional federal and state income taxes in economic activity and because ESOP participants pay taxes on the additional wealth when their accounts are liquidated from the ESOP.
How does the government prevent abuse of these ESOP tax benefits?
To prevent abuse of these significant tax benefits, Congress established the requirements of IRC Section 409(p) Anti-Abuse Testing to help ensure that an S Corporation ESOP company provides broad-based ownership and coverage that benefits rank-and-file employees.
Selling to an ESOP
Please stay tuned as we continue to examine the many reasons to consider Selling to an ESOP. Here are some of the recent reasons that we have discussed:
The January 17, 2012 Employee Ownership Update is online and discusses the following:
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Iowa Governor Announces ESOP Initiative
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Shared Capitalism Companies Among the Best to Work For
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Mitt Romney and the ESOP at Bain
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Employee Ownership in the UK
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Department of Labor Plans to Re-Propose Fiduciary Regulations
The Update shares an update on the DOL Re-Proposal of the DOL Regulation to Change the Definition of Fiduciary. The DOL has said they still intend to re-propose regulations that would define the conditions that an appraiser would be deemed a fiduciary:
Fil Williams, DOL senior employee benefits law specialist for the Employee Benefits Security Administration's Office of Regulations and Interpretations, said that the department still plans to re-propose regulations that would specify the conditions under which a stock appraiser would be deemed a plan fiduciary. Williams made the remarks on January 11 at the Los Angeles Benefits Conference.
The Update also discusses Iowa's Employee Stock Ownership Plan (ESOP) Initiative that would promote Selling to an ESOP as a way to Save Local Jobs and Strengthen Local Communities. It also provides more details about Mitt Romney’s involvement with the Bain & Company ESOP.
Every small business owner will face a time when they will need to sell their company. When a small business is put up for sale to a third party, particularly in rural areas, local jobs and the other benefits are at risk. Since an acquiring business may not have any ties to the local community, they could liquidate the assets of the company or relocate the company operations to a different location. This obviously has negative consequences for the employees and the community as a whole.
Selling to an ESOP significantly increases the likelihood that a company will remain locally owned, jobs will remain in the local community, and the legacy of the company will continue. This is because the company will remain locally owned, not only while the Business Owner still Retains Control of the Company after Selling to an ESOP, but also after the business owner retires and transitions control of the company to the next generation of leadership.
In addition to protecting jobs and the direct and indirect impact of the dollars spent in the local community, small businesses provide stability and many other financial and social benefits:
Stacy Mitchell, of the Institute for Local Self-Reliance, explains, "One of the primary reasons that a dollar at a locally owned business goes so much further is that local businesses tend to rely on other local businesses for the goods and services they need. They bank at the local banks, hire a local accountant, a local web designer, and they advertise more in local newspapers and radio stations. They tend to be enmeshed in a web of economic connections."
Smaller, neighborhood-based businesses are even good for the environment, according to Mitchell. Big-box stores consume acres of real estate, usually on sites that were former farmland or wild, and they serve a larger area than the mom-and-pop stores. Because of the rise of large chain stores, she says, the number of miles logged per household for shopping has grown more than 300 percent, while household driving overall has expanded 75 percent.
In addition to hard dollars, local businesses also tend to be the charitable mainstays of a community. Indie businesses frequently act as ad hoc community centers, says Meg Smith, membership and marketing officer for the American Booksellers Association (ABA). She points to the way book stores are including cafes and hosting not only readings but also other types of events.
Business-saving idea when owner retires: Give keys to employees shares a great example:
76, Cliff Wilson was ready to sell Ritchie Industries, the Conrad, Ia., livestock equipment business that his father had purchased in 1943 and that they had grown together.
“I would have loved to buy the business myself, but I didn’t have the finances,” said Wilson’s son-in-law Leon Yantis.
The buyers who had money were interested only in the assets and would have closed the manufacturing plant in Conrad, a town of about 1,110 residents north of Marshalltown. “All the employees would have been out of work,” Yantis said.
That’s when Yantis and the company’s other employees decided to buy the company, using an employee stock ownership plan, or ESOP. Eight years later, the fully employee-owned company is now thriving with about 65 workers.
It’s a story that’s playing out across Iowa, said Debi Durham, the state’s economic development director. Owners nearing retirement are forced to look for buyers outside Iowa, an option that could result in the shutdown of vibrant companies. Such losses are particularly hard on small towns, dependent on a handful of businesses to provide jobs and serve as partners in community projects like building baseball fields.
This is why Iowa Governor Terry Branstad has made Selling to an ESOP one of his main initiatives (Iowa's Employee Stock Ownership Plan (ESOP) Initiative).
Please stay tuned as we continue to examine the many reasons to consider Selling to an ESOP:
Iowa Governor Terry Branstad recently included Selling to an ESOP as one of his 2012 initiatives in his 2012 Condition of the State address:
The final piece to this jobs and careers puzzle involves the dilemma faced in many rural Iowa communities when a local anchor business is put up for sale.
When hometown businesses are sold to out of town, out of state, or out of country buyers, the local community often suffers.
We must work to keep Iowa companies in Iowa, even when an ownership change takes place.
This is not just a tool for Iowa businesses; it is a tool for Iowa communities–Iowa communities where these companies represent so much more than jobs; where these companies represent our families, friends and way of life.
Many of these companies have operated in Iowa for years, operated by owners committed to the local way of life. And when these owners wish to retire, they must have options for keeping their company local.
I am proposing legislation that will encourage the formation of Employee Stock Option Plans to encourage the sale of these local businesses to the very employees who have made that company a profitable success.
Our plan will encourage more Iowans to own a stake in their company, to reap a greater share of the fruits of their own labor, and to help protect the quality of life in their local community.
Employee ownership is great for the Iowa communities in which these businesses, jobs, and careers exist.
Branstad pitches economic initiatives in Condition of the State address discusses some of the details, including a state deduction on state capital gains taxes for the selling business owner and assistance by the Iowa Economic Development Authority.
Under Branstad’s plan, a business owner would receive a deduction on state capital gains taxes when he sold his company to employees.
Such an incentive could encourage an owner to help finance the sale, said Stephanie Silverman, president of Employee-Owned S Corporations of America, a trade group.
“Wherever the state can create incentives for the original owner, that helps defray the cost of financing and is more likely to yield additional employee ownership,” she said.
The Economic Development Authority also would offer technical assistance and legal advice to employee buyers.
Here is a list of some of the other state ESOP and employee ownership programs:
Please let me know if you are aware of a state program that I missed.
Washington Affects Employee Ownership with a recap of the recent legislation proposed by The 112th United States Congress to support and expand employee ownership and make ESOPs the “exit vehicle of choice for small business entrepreneurs”:
The December 15, 2011 Employee Ownership Update is online and discusses the following:
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SEC Alleges Fraudulent Stock Valuation at Stiefel Labs
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New Data Show Broad-Based Option Plans Decrease Employee Turnover
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Employee Ownership in Southern Africa
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Penn Leadership Program for ESOP CEOs
The Update discusses a study that found that public company broad-based stock option plans reduce employee turnover, particularly in high performing industries:
In industries with a 10% over-performance, for instance, broad-based options reduce turnover by 20%, relative to averages.
The January 2, 2012 Employee Ownership Update is online and discusses the following:
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Berkshire Hathaway Completes Purchase of Employee-Owned Newspaper
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Stock Options Spread Through India's Economy
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New ESPP Reference from CEPI
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NCEO's ESOP Executive Compensation Survey Closes January 6
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Spreading the Word on Employee Ownership
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NCEO Board Elections Open January 4
This Update discussed the closing of the Berkshire Hathaway purchase of the Omaha World-Herald newspaper company. The stated reason of the sale of the employee owned company was Due to its Upcoming Repurchase Obligation. This Update also provides an update on some NCEO projects and initiatives.
If you paid any ESOP or other qualified retirement plan benefit payments last year you will have to prepare and file some government forms. The General Instructions for Forms 1099, 1098, 5498, and W-2G provides guidance on how to prepare and file the forms:
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IRS Forms 1099-R – Copies B, C, and 2 must be furnished by January 31, 2012 to anyone who received a plan distribution (of $10 or more). Copy A must be filed with the IRS by February 28, 2012 or April 2, 2012 if filing the forms electronically.
Generally, you are required to file electronically if you file 250 or more information returns.
IRS Publication 1220 - Specifications for Filing Forms 1098, 1099, 3921, 3922, 5498, 8935, and W-2G, Electronically provides the procedures for reporting electronically through the IRS Filing Information Returns Electronically (FIRE) System.
IRS Revenue Procedure 2011-40 provides specifications for filing electronically for the 2011 tax year.
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IRS Form 1096 – This form must be sent as a transmittal document whenever paper copies of the IRS Forms 1099-R are sent to the IRS. Because the paper forms are scanned during processing, you cannot file with the forms printed from the IRS website.
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IRS Form 945 – This form is used to report federal withholding from non-payroll payments, including distributions from qualified retirement plans. The deadline is January 31, 2012. However, if you made deposits on time in full payment of the taxes for the year, you may file the return by February 10, 2012.
As you are preparing the Form 1099-R - Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., you may be processing some forms for participants that received lump sum distributions that may qualify for net unrealized appreciation (NUA) treatment. Assuming a distribution qualifies for NUA treatment, the amounts would generally be recorded as follows:
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Box 1 – Gross distribution – This amount will be equal to the fair market value of the shares plus and cash distributed.
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Box 2a – Taxable amount – This amount will be equal to the lesser of the cost basis and the fair market value of the shares distributed plus any cash distributed.
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Box 6 - Net unrealized appreciation in employer's securities – This amount will be the difference between box 1 and box 2a.
2011 Changes
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Renumbering of boxes. Boxes 10 through 15 have been renumbered as boxes 12 through 17, respectively. The blank box formerly to the left of former box 10 has been numbered and labeled “ 10 Amount allocable to IRR within 5 years” and a dollar sign ($) has been added. The box “1st year of desig. Roth contrib.” has been numbered 11.
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Prohibited transactions. Information regarding identifying and reporting prohibited transactions relating to an IRA has been added to Specific Instructions for Form 1099-R.
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Reporting excess employer contributions returned to an employer. Instructions for reporting excess employer contributions (plus earnings on them) returned to an employer have been added to Distributions under Employee Plans Compliance Resolution System (EPCRS).
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Rollovers to designated Roth accounts within the same plan (in-plan Roth rollovers). Instructions for reporting in-plan Roth rollovers that are direct rollovers have been added to Designated Roth accounts starting on page 4 and the instructions for boxes 1 and 2a. Also, for more information on in-plan Roth rollovers, see Notice 2010-84.
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Distributions from designated Roth accounts allocable to in-plan Roth rollovers. Instructions for reporting distributions from a designated Roth account allocable to an in-plan Roth rollover have been added to Designated Roth Account Distributions on pages 2 and 8 and the instructions for new box 10. Also, for more information on in-plan Roth rollovers, see Notice 2010-84.
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Code B. Distribution Code B has been reworded for reporting all distributions from designated Roth accounts.
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Code D. Distribution Code D has been eliminated. See Distribution Codes 8 and P.
You should also be aware of the rules for Reporting a Rollover to Roth IRA on IRS Form 1099-R and the 2009 Change in Reporting Distributions of 404(k) Dividends on IRS Form 1099-R.
What are Required Minimum Distributions?
IRC Section 401(a)(9) - Qualified pension, profit-sharing, and stock bonus plans - Required distributions provides statutory guidance on RMDs. An IRS Retirement Plans FAQs regarding the Required Minimum Distributions also provides a definition:
Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 70 ½, regardless of whether he or she is retired.
Retirement plan participants and IRA owners are responsible for taking the correct amount of RMDs on time every year from their accounts, and they face stiff penalties for failure to take RMDs.
When a retirement plan account owner or IRA owner dies before RMDs have begun, different RMD rules apply to the beneficiary of the account or IRA. Generally, the entire amount of the owner's benefit must be distributed to the beneficiary who is an individual either (1) within 5 years of the owner's death, or (2) over the life of the beneficiary starting no later than one year following the owner's death. See Publication 590 - Individual Retirement Arrangements (IRAs) for complete details on when beneficiaries must start receiving RMDs.
The IRS RMD information page also answers the following questions
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What types of retirement plans require minimum distributions?
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When is the deadline for receiving a RMD from an IRA?
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How is the amount of the RMD calculated?
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Can an account owner just take a RMD from one account instead of separately from each account?
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Who calculates the amount of the RMD?
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Can an account owner withdraw more than the RMD?
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What happens if a person does not take a RMD by the required deadline?
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Can the penalty for not taking the full RMD be waived?
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Can a distribution in excess of the RMD for one year be applied to the RMD for a future year?
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How are RMDs taxed?
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Can RMD amounts be rolled over into another tax-deferred account?
Required Beginning Date
Generally, all participants must receive their first RMD by the April 1 of the year following the year they meet both of the following requirements: attain age 70½ and terminate employment. This date is referred to as the participant's required beginning date.
Let's look at an example of a participant that attained age 70 ½ and terminated service with the company in 2011:
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Required Beginning Date – Since the participant met both requirements in 2011, the required beginning date is April 1, 2012.
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RMD #1 - The participant must receive their first RMD by April 1, 2012. This RMD is the participant's 2011 RMD and is calculated using the participant’s 2010 account balance.
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RMD #2 - The participant must receive their second RMD by December 31, 2012. This RMD is the participant's 2012 RMD and is calculated using the participant’s 2011 account balance.
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Each subsequent RMD - Each subsequent RMD will be due on each subsequent December 31 (calculated using the prior year's balance).
Some plans provide eligible participants with the option to take their first RMD in the year they satisfy both requirements. Using the example, the participant would take their first RMD in 2011.
Another option is for the participant to take both their first and second RMDs before April 1 of the year the RMDs are due. Using the example, the first two RMDs would be taken in 2012 by April 1, 2012.
What about the RMD Waiver?
You may be aware of the waiver of the requirement to take 2009 Required Minimum Distributions (RMDs). There is no waiver for RMDs for calendar years after 2009. If you have not already done so, a plan amendment must be adopted by the last day of 2011 plan year to document how the 2009 RMDs were processed.
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RMD Worksheets
The IRS has two RMD worksheets that you may find useful:
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RMD Calculators
Here are two online RMD calculators you may find useful.
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RMD Planner - Annual Distribution Calculator – This calculator requires you to enter the date of birth, status of the designated beneficiary, the designated beneficiary's date of birth (if applicable), and the prior year-end balance.
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Calculate Your Minimum Required Distribution calculator – This is a basic calculator that only requires your age at the end of this year and the balance.
In previous years I have tested some of the calculators using the Uniform Lifetime Table and my calculation agreed with the online calculators. The IRS has provided links to the Joint and Last Survivor Table, Uniform Lifetime Table, and Single Life Expectancy Table.
Do you have enough cash in the ESOP to pay RMDs?
Another factor to consider for RMDs is that the plan may not have enough cash to pay to the participant(s) to satisfy the RMD requirements. If this is the case, the plan will most likely have three options:
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The stock will be repurchased (recycled) in the plan to other participants - cash will need to be contributed to the plan.
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The stock will be sold and the proceeds used to pay the participants – a stock appraisal on the date of the sale will need to be obtained.
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The stock will be distributed and put back to the company (or the ESOP). It is important to note that as it gets closer to December 31, it becomes more likely that the stock value may be "stale" (see above discussion) and not an accurate reflection of the actual stock value.
This situation can be avoided if you have identified RMDs ahead of time and have a well-planned distribution policy.
What value should be used to determine the number of shares to distribute?
The value of the distribution is calculated using the fair market value of the stock as of the date of the distribution, and the value of the distribution must be at least equal to the amount required to be distributed to satisfy the RMD requirements. RMDs – How many shares to distribute? discusses an example.