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ESOP Transactions and Compliance Issues: Structuring Options, SECURE 2.0, IRS Expanded Focus, Fiduciary Liability

Note: CPE credit is not offered on this program

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Wednesday, October 18, 2023

Recorded event now available

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This CLE course will provide ERISA counsel, ESOP trustees, selling shareholders, and plan sponsors guidance on employee stock ownership plan (ESOP) transactions and compliance issues in light of the recent IRS notice on ESOPs. The panel will discuss (1) rules and procedures governing fiduciary duties of trustees in ESOP transactions, (2) the SECURE 2.0 provisions applicable to ESOPs, (3) the recent IRS News Release on ESOPs, and (4) best practices in satisfying fiduciary duties in ESOP transactions and avoiding litigation.

Description

An ESOP can be a useful financing and liquidity strategy in addition to providing tax and employee benefits. However, the DOL heavily scrutinizes the design and structure of ESOP transactions, and the IRS recently indicated that it will continue to undertake enforcement strategies to ensure compliance with tax law requirements by employers sponsoring an ESOP.

Under SECURE 2.0, key provisions impacting ESOPs include: (1) amending Section 1042 of the IRC to allow limited application of tax deferral on a sale of stock to S corporation ESOPs; (2) amending Code Section 401(a)(35) to change the definition of "publicly traded" for diversification requirements; (3) directing the DOL to create an Employee Ownership Initiative; and (4) directing the DOL to release formal guidance on ESOP valuation standards.

Finally, on Aug. 9, 2023, the IRS announced that it will continue to undertake enforcement strategies to ensure compliance with tax law requirements, with a focus on specific ESOP transactions. Knowledge of transaction structures will allow ESOP counsel to achieve the goals and objectives of the parties involved while also complying with applicable regulations.

Listen as our panel discusses rules and regulations impacting ESOP transactions, DOL guidance, and other critical issues associated with structuring ESOP transactions.

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Outline

  1. Overview of rules and procedures governing fiduciary and compliance duties of trustees and advisers in ESOP transactions.
  2. The SECURE 2.0 ESOP provisions applicable to ESOPs
  3. The recent IRS New Release on ESOPs
  4. Best practices in satisfying fiduciary duties in ESOP transactions and avoiding litigation

Benefits

The panel will discuss these and other key issues:

  • Navigating SECURE 2.0 rules affecting ESOPs
  • Understanding the recent IRS News Release on ESOPs
  • Recognizing rules and procedures governing fiduciary duties of trustees in ESOP transactions
  • Understanding best practices in satisfying fiduciary duties in ESOP transactions and avoiding litigation

Faculty

Lewis, Renee
Renee P. Lewis
Partner
Holland & Knight

Ms. Lewis is a partner in Holland & Knight's Chicago office and a member of the firm's Financial...  |  Read More

Pardys, David
David N. Pardys
Partner
Holland & Knight

Mr. Pardys is an employee benefits and executive compensation attorney in Holland & Knight's Philadelphia...  |  Read More

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