The January 29, 2008 Employee Ownership Update is online and discusses the following:

• Peculiar Decision Allows General Mills Deduction for Redemptive Dividends Used for ESOP Distributions


• Old Account of Employee Ownership at Proctor & Gamble Worth a Look


• CEPI Extends Risks and Controls Project to Restricted Stock Awards/Units
  

Deductible Redemptive Dividends Used to Fund ESOP Distributions

Most 401(k) plan sponsors have become accustomed to performing a due diligence review of plan expenses every one to five years. This review is done primarily because ERISA provides that qualified retirement plans are solely for the benefit of the participants and that plan expenses must be reasonable. The review also helps ensure that fees as well as the supplementary tools provided are competitive with the marketplace.

The Employee Ownership Blog discusses the purpose of the Employee Ownership foundation and the mission and vision of the ESOP Association:

Pre-Tax Rollovers to Roth IRAs discusses how a plan participant may roll over distributions from qualified retirement plans to Roth IRAs beginning January 1, 2008.

The Great Place to Work^® Institute has released the list of 100 Best Companies to Work for 2008. Last year we discussed how over 50% of the 100 Best Companies to Work for 2007 (with stock) had broad-based employee ownership programs. While specific employee ownership data is not published with the list, it appears that the percentage of companies with broad-based employee ownership remains significant. Here are some other trends noted in the press release:

IRA Update: Mandatory or Voluntary? Congress Creates More Confusion on the Non-Spouse Rollover Provision under PPA 2006 provides another summary of the non-spouse beneficiary rollover rules:

If you paid any benefit payments last year, then 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.

Dancing With Tycoons? is an interesting article that provides a snapshot of one person's viewpoint of the history of ESOPs. The article includes discussions about the following events in the history of ESOPs:

Last year we discussed the reasons to take or avoid taking a 401(k) participant loan in Should I Borrow From My 401(k) Plan?. We also discussed the development of a 401(k) Debit Card/Line of Credit. Just Put It on My 401(k) Debit Card provides more details on how a 401(k) debit card would work:

“The loan begins only after the money is removed from the account. Instead of a payroll deduction, participants are billed directly, and then pay back the loan through the same mechanisms used to repay a credit card. Depending on the employer, some may also qualify for a revolving loan -- taking out and paying back money as they need it.”

Is the 401(k) debit card a good idea? The 401k Debit Card: Probably One of the Worst Ideas Ever identifies the “So-Called Benefits”, including why it is a stretch to refer to them as benefits, and the “Obvious Drawbacks” of a 401(k) debit card:

Does Your Company Have a Communications Committee? asks ESOP companies if they have created any employee participation programs and contemplates the importance of having an employee communications committee:

The IRS has released a special edition of the Employee Plans News: Employee Plans News: Special Edition, January 2008. The special edition announces three new revised forms as well as a revision in progress. It also contains a reminder that the Cycle B submission period for determination applications ends January 31, 2008, and Cycle C starts on February 1, 2009. It also discusses two proposed regulations issued in December.

The January 15, 2008 Employee Ownership Update is online and discusses the following:

In my post titled Why the Number of ESOPs is not Growing at a Faster Rate, I stated that we need to look at what actions need to be taken to increase the ESOP growth rate. One way to increase the ESOP growth rate is by making sure that employee ownership is included in academic discussions with our next generation of business leaders and advisors. A Quiet Breakthrough discusses the first ever MBA course in employee ownership:

Fast Focus on Business - Employee Owned Companies is a 3-4 minute video clip that describes the benefits of being an employee owned company:

Consumer Reports Names 12 Money Blunders That Could Cost You $1 Million lists 12 costly decisions and provides tips to avoid them. A press release highlights the first six:

One of your most important responsibilities is to ensure that your plan documents are updated as required by law and are consistent with the way the plan is actually being administered. Plan documents include, but are not limited to, the plan document, trust document, summary plan description (SPD), and loan documents. While your review of the plan documents should be an ongoing process, you generally need to make sure that any amendments or restatements are executed by the last day of the plan year if you intend for them to be effective for that plan year. You should start by answering the following questions and using your answers as a starting point to a discussion with your ESOP counsel and ESOP advisor:

Last week we mentioned the ESOP Association's 30th Anniversary. Here is a link to the press release:

Current ESOP Participant Can Represent Former Participants in Suit discusses how a U.S. District Court determined that a current ESOP participant can represent the interests of cashed out former participants:

Lampin Corp. (Uxbridge, MA)

The Treasury Department and the IRS released Treasury Regulation - REG–136701–07 - Diversification Requirements for Certain Defined Contribution Plans "relating to diversification requirements for certain defined contribution plans and to publicly traded employer securities. These regulations will affect administrators of, employers maintaining, participants in, and beneficiaries of defined contribution plans that are invested in employer securities." For additional information, including a history of the proposed regulations, and links to the proposed regulation, check out the above-mentioned link.

The ESOP Association is celebrating its 30^th anniversary by replacing their current logo with a special logo that "incorporates the advocacy work and the Chapter program".