The ESOP Association Comments on Sample Plan Language for 409(p) Transfers
The ESOP Association announced that they have submitted comments to the IRS concerning the
Sample Plan Language for IRC Section 409(p) Transfers:
August 18, 2008 (Washington, DC) – On August 15, 2008, The ESOP Association submitted comments to the Internal Revenue Service (IRS) concerning Sample Plan Language for Section 409(p) Transfers. Section 409(p) ensures that an S ESOP arrangement is a broad-based employee ownership plan. The comments asked the IRS to make clear that the sample language represents a permitted approach to correction but is neither mandatory nor the exclusive method for preventing a possible violation of the complex provisions of 409(p). The ESOP Association comments included language changes that would expand the situation to which the preventative approach could apply.
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The ESOP Association is pleased to work with the IRS," said J. Michael Keeling, President of The ESOP Association. "Our goal is to ensure the laws governing ESOPs are implemented in accordance with Congressional intent to broaden ownership in our nation and to so as effectively as possible for our members."
The comments were drafted by Laurence A. Goldberg, Susan Lenczewski, Richard Acheson, and Karen Ng, and were reviewed by Riva Johnson:
We appreciate the efforts of the Service in providing this assistance to taxpayers affected by Section 409(p) of the IRC. In our view, the SPL may be helpful in certain limited circumstances, but may not be the preferred method of correction in many other circumstances. For this reason, (1) we request that the Service make clear that the sample language represents a permitted approach to correction, but is neither mandatory nor the exclusive method for preventing a possible violation; and (2) we enclose suggested language changes to the SPL that would expand the situations to which this preventive approach could apply. Please see the enclosed version, which is redlined to show our suggested changes.
The comments discussed the following: