BASIC ESOP ADMINISTRATION - The ESOP Association

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John Burgess - Seyfarth Shaw LLPJonathan Markham – Blue Ridge ESOP AssociatesAllocation - Forfeitures• The non-vested portion of a participant’s account balance istypically forfeited upon the earlier of a 5 consecutive year break inservice or a complete distribution of the participant’s vested accountbalance.▫ Deemed Distribution – participants who are zero percent vested aregenerally deemed to receive a distribution as of the date they terminate.• Rehire Reinstatements▫ If a participant is rehired before a 5 consecutive year break in service andthey pay back their distribution, their forfeited account balance shouldbe reinstated.▫ Reinstatements typically come from current year forfeitures but can alsocome from Employer Contributions or investment earnings.• Reallocated forfeitures are typically allocated on the same basis asEmployer Contributions.
John Burgess - Seyfarth Shaw LLPJonathan Markham – Blue Ridge ESOP AssociatesAllocation – Dividends• Allocated Stock▫ Generally allocated to participants based on theamount of shares they hold.• Unallocated Stock▫ Generally allocated to participants based on theireligible compensation or points.▫ Can also be allocated to participants based ontheir total beginning account balance, includingother investments.• Dividends can be passed through to participants
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BASIC ESOP ADMINISTRATION - The ESOP Association

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