Fiduciaries, administrators, sponsors, advisors, trustees and others with involvement or responsibility for Employee Stock Option Plans (ESOPs) should review these rules and ensure that appropriate steps are taken to update their plan terms and practices to comply with new rules scheduled to be published in the Internal Revenue Bulletin on May 13, 2013 by the Internal Revenue Service on investment diversification.
Maintaining legally compliant and defensible arrangements for investing company stock in employee stock and other defined contribution employee benefit and deferred compensation plans continues to become increasingly complicated in the face of the expanding range of rules adopted by Congress and federal regulators looking to protect participants against stock drop and other actual or perceived abuse.
Among these tightening requirements are new rules announced in Notice 2013-17, which address the circumstances in which an ESOP that satisfied the diversification requirements of § 401(a)(28)(B)(i) by allowing distribution of a portion of a participant’s account has become subject to the diversification requirements of § 401(a)(35). Notice 2013-17 will be published in Internal Revenue Bulletin 2013-20 on May 13, 2013.
The new diversification rules are reflective of a host of new and proposed rules and enforcement positions that Congress and federal regulators have or are contemplating to address perceived abuses or risks arising from the investment or retention of company stock in employee benefit plans. Some of this new regulation arises from decline in retirement plan asset value that results from declines in stock value when the economy or a particular business suffers economic setbacks. Along with these economic concerns, other regulation seeks to safeguard participants and plans against Enron, Madoff or other activities by plan sponsors, investment advisors, executives or others that Congress or regulators perceive inappropriately put retirement and savings of workers at risk.
In response to Notice 2013-17 and other new rules, fiduciaries, administrators, sponsors, advisors, trustees and others with involvement or responsibility for ESOP should review these rules and ensure that appropriate steps are taken to update their plan terms and practices to comply with this new guidance. In conjunction with this review, most also will find advisable to review the adequacy of their existing policies and plan terms about their program’s investments in company and other stock in light of evolving fiduciary responsibility and other investment rules and enforcement guidance of the Internal Revenue Service as well as the Department of Labor Employee Benefit Security Administration and the Securities and Exchange Commission.
If you have any questions or need help reviewing and updating your ESOP or other employee benefit plans, or with any other workforce management, employee benefits or compensation matters, please do not hesitate to contact the author of this update, Board Certified Labor and Employment Attorney and Management Consultant Cynthia Marcotte Stamer at 469.767.8872.
About The Author
Management attorney and consultant Cynthia Marcotte Stamer helps businesses, governments and associations solve problems, develop and implement strategies to manage people, processes, and regulatory exposures to meet their business and operational goals and manage legal, operational and other risks. Board certified in labor and employment law by the Texas Board of Legal Specialization, with more than 25 years human resource, employee benefits and management experience, Ms. Stamer helps businesses manage their people-related risks and the performance of their internal and external workforce though appropriate human resources, employee benefit, worker’s compensation, insurance, outsourcing and risk management strategies domestically and internationally. Recognized in the International Who’s Who of Professionals and bearing the Martindale Hubble AV-Rating, Ms. Stamer also is a highly regarded author and speaker, who regularly conducts management and other training on a wide range of labor and employment, employee benefit, human resources, internal controls and other related risk management matters. Her writings frequently are published by the American Bar Association (ABA), Aspen Publishers, Bureau of National Affairs, the American Health Lawyers Association, SHRM, World At Work, Government Institutes, Inc., Atlantic Information Services, Employee Benefit News, and many others. For a listing of some of these publications and programs, see here. Her insights on human resources risk management matters also have been quoted in The Wall Street Journal, various publications of The Bureau of National Affairs and Aspen Publishing, the Dallas Morning News, Spencer Publications, Health Leaders, Business Insurance, the Dallas and Houston Business Journals and a host of other publications. Chair of the ABA RPTE Employee Benefit and Other Compensation Committee, a council member of the ABA Joint Committee on Employee Benefits, and the Legislative Chair of the Dallas Human Resources Management Association Government Affairs Committee, she also serves in leadership positions in many human resources, corporate compliance, and other professional and civic organizations. For more details about Ms. Stamer’s experience and other credentials, contact Ms. Stamer, information about workshops and other training, selected publications and other human resources related information, see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail here.
Other Helpful Resources & Other Information
If you found these updates of interest, you also be interested in one or more of the following other recent articles published in this electronic Solutions Law publication available for review here including:
- Justice Department Charges Employer, Pension Plan With Violating USERRA Reemployment Rights
- Health Care Reform Adds New Cost Implications To Already Hot Worker Misclassification Risks
- Businesses Urged To Strengthen Their Worker Classification Defenses As IRS, Other Agencies Step Up Audits & Enforcement
- 13 Tips To Help Business Cope With Health Care Reform Now!
- OCR Publishes Long-Anticipated Omnibus Restatement of HIPAA Privacy, Security, Breach Notification & Enforcement Rules
- OCR Gives HIPAA Guidance On Safety Disclosures
- IRS Offers New Simplified Option For Businesses Claiming Home Office Deductions For Home-Based Business Owners & Workers
- IRS Announces Cost of Living & American Taxpayer Relief Act Income Tax Adjustments
- Tax-Related ID Theft Growing Problem For IRS, Taxpayers
- Tax Saver’s Credit Helps Low & Moderate Income Workers Save For Retirement; Possible Tool To Help Boost Their Participation In Employer Plans
- Self-Insured Health Plan Sponsors, Health Insurers Brace To Pay New ACA-Imposed Fees
- 1st OCR Small HIPAA Breach Settlement Shows Plans, Other Covered Entities At Risk From Small Breach Reports Too
- Labor Department Targeting Businesses Violating Overtime, Other Wage & Hour Laws
- Company President, Officer Can’t Use Bankruptcy To Avoid Liability For Using Plan Money For Company Operations
- Peter Madoff 10 Sentence For Defrauding ERISA Plans Reminder Manage Plan Investment Responsibilities
- $1.25M NLRB Backpay Order Highlights Risks of Mismanaging Union Risks In Health Care & Others M&A Deals
- As EEOC Steps Up ADA Accommodation Enforcement, New DOD Apple App, Other Resources Released
- $1.5 M HIPAA Security Breach Resolution Agreement Shows Looming HIPAA Risks
- ARRA, Other Government Contractors Face Growing Enforcement & Audit Risks
- Disability Exposures Big US Business Risk; New DOD App Helps ID Resources
- Personal Consumer Information Protection in Hospital/Healthcare Setting At HIMSS November 11
- Obama Administration Continues War On Management Despite NLRB’s Tempoary Setback In Suit Against Arizona Secret Ballot Law
- Companies, Officers, Directors, Fiduciaries & Vendors Urged To Confirm ERISA Credentials & Bonding For Internal Staff, Plan Fidiciaries, Vendors Dealing With Benefits
- Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
- USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements
- Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries
- Stamer Speaks On HIPAA Developments On 9/14 At ABA Joint Tax/RPTE Fall Meeting In Boston
- Employer Pays $475,000 To Settle ADA Discrimination Lawsuit Challenging Medical Fitness Testing For EMTs, Firefighters & Other Public Safety Worker’s
- Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits
- HIPAA & Texas Law Require HIPAA Training. Register Now For August 14 HIPAA Update Workshop!
- EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements
- Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective
- Use NIH & Other Free Government Resources To Help Round Out Wellness Programs
If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here.
For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@solutionslawyer.net.
©2012 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.
Cynthia Marcotte Stamer
slproc.com 