409A Extension/Selling to an ESOP is a Likely Strategy for Transferring Ownership/New Proposed Regulation
September 17, 2007

The Employee Ownership Update for September 14, 2007 is now online covering the following items:

Deadline for Written Compliance with 409A Delayed Again

This section discusses Notice 2007-78 - 2008 Transition Relief and Additional Guidance on the Application of § 409A to Nonqualified Deferred Compensation Plans.

15% of Inc. 5000 Companies Plan to Sell to an ESOP

In a prior post (In the News: Fastest Growing Private Companies/Controlling Their Destiny) we discussed an ESOP company listed on the the Inc. 5000 Index, a list of the 5,000 Fastest Growing Private Companies in America. The Update section discusses how 22.3% of companies on the Inc. 5000 list “say that selling to an ESOP is a likely strategy for transferring ownership”:

“The percentage may turn out to be higher than that long term. In reality, well under 1% of these companies will likely go public (follow-up surveys of companies on the smaller Inc. 500 list have shown that only about 10 in 500 end up going public). The percentage is impressive given that these are fast-growing and often young companies, not traditionally the primary market for ESOPs.”

Employee Ownership Gains Ground in South Africa

New Proposed Regulation

The DOL announced the following DOL Proposed Regulation:

DOL Proposed Regulation - Multi-Employer Pension Plan Information Made Available on Request
[HTML] [PDF] [News Release]

"The U.S. Department of Labor today announced proposed rules giving participants in multiemployer pension plans, their union representatives and contributing employers the right to request and receive copies of certain actuarial, financial and other funding-related documents from their plans. The new disclosure rules implement provisions of the Pension Protection Act of 2006 (PPA).

These rules will ensure that workers, employee representatives and employers receive important information about the financial operation of their multiemployer plans,” said Bradford P. Campbell, assistant secretary of the Labor Department’s Employee Benefits Security Administration.

Under the PPA, plan administrators of multiemployer plans must furnish upon the written request of participants, beneficiaries, employee representatives and contributing employers copies of actuarial, financial and funding-related documents. The plan has 30 days after a request to furnish the documents, which are limited to one copy per report within a 12-month period."