BW INSIGHTS

SECTION 1202 GAIN EXCLUSION IN SALES TO ESOPS

By Drew D. Larson & Cynthia Boyle Lande | 11.11.2024

ESOPs provide many tax advantages for both sellers and the ESOP-owned company. In addition to all of the ESOP-specific benefits, sales to ESOPs can also potentially qualify for gain exclusion under Section 1202 of the Internal Revenue Code. Benefits of Section 1202 Section 1202 provides significant tax benefits for sellers of qualified small... Read More

Navigating ESOP Distributions: Method, Form, and Policy

By Cynthia Boyle Lande, Drew D. Larson & Sarah E. Herz | 10.22.2024

Understanding ESOP (Employee Stock Ownership Plan) distribution requirements are crucial for compliant operation of your ESOP and managing distribution and repurchase obligations. ESOP plan designs and distribution terms can vary significantly, but all ESOPs are subject to the Employee Retirement Income Security Act (ERISA) and tax rules. In this... Read More

Government Relations Update - October 17, 2024 REC Summary

By Matthew H. McKinney, R.G. Schwarm & Julie A. Smith | 10.18.2024

The Revenue Estimating Conference (“REC”) met Thursday (10.17.24) as part of their standard schedule of meetings to estimate future state revenues. REC members Kraig Paulsen (Gov.’s Appointee), Jennifer Acton (LSA), and Jeff Plagge (Public Member) serve on the three-member panel. A summary of the information discussed during the meeting is below,... Read More

ESOP SELLER PERSPECTIVES – UNDERSTANDING SECTION 1042 IN ESOP SALES

By Cynthia Boyle Lande & Drew D. Larson | 10.10.2024

Understanding Section 1042: A Tax-Efficient Strategy for ESOP Sales In the realm of Employee Stock Ownership Plans (ESOPs), Section 1042 of the Internal Revenue Code offers a significant tax advantage for business owners looking to sell their company to an ESOP. This provision allows for the deferral of capital gains taxes upon the sale of... Read More

ERISA FIDUCIARY DUTIES AND CYBERSECURITY

By Caleb J. Brus & Cynthia Boyle Lande | 09.26.2024

The intersection of fiduciary duties under the Employee Retirement Income Security Act (“ERISA”) and cybersecurity has become increasingly prominent in our digital world. ERISA fiduciaries are responsible for managing retirement plans prudently and solely in the interest of participants and beneficiaries. As cyber threats grow, ensuring the... Read More

IRS Issues Guidance on Matching Contributions for Student Loan Payments

By Maggie Simonson Schild & Cynthia Boyle Lande | 09.16.2024

Background On August 19, 2024, the IRS issued Notice 2024-63 (the “Notice”) to provide highly anticipated interim guidance on Section 110 of Secure 2.0 Act (“Secure 2.0”), which was enacted in 2022. Secure 2.0 amended the definition of matching contributions to allow an employer to make matching contributions beginning in 2024 to 401(k), 403(b),... Read More

ESOP Seller Perspectives – The Employee and Community Benefits of ESOP Sales

By Cynthia Boyle Lande & Drew D. Larson | 08.21.2024

Selling a company to an Employee Stock Ownership Plan (ESOP) extends far beyond financial transactions—it fosters a symbiotic relationship between the business, its employees, and the surrounding community. The decision to sell to an ESOP brings forth a multitude of benefits that ripple through both the internal workforce and the broader... Read More

ESOP Eligibility: Who’s In, and Who’s Out?

By Cynthia Boyle Lande & Drew D. Larson | 08.14.2024

Employee Stock Ownership Plans (ESOPs) offer unique opportunities for employees to become owners of their company and share in its success. Understanding the rules surrounding ESOP eligibility and properly determining which employees are eligible for participation are crucial for sponsoring employers. In this client update, we will outline the... Read More

DOL FIDUCIARY RULE STAYED INDEFINITELY

By Caleb J. Brus & Cynthia Boyle Lande | 07.29.2024

A federal judge in Texas has temporarily blocked the Department of Labor’s (“DOL”) “Retirement Security Rule” (the Fiduciary Rule) ahead of its September 23, 2024, effective date. BACKGROUND ON THE FIDUCIARY RULE The DOL has been on a fourteen-year quest to replace a fiduciary definition in place since 1975. The saga began in 2010, but fierce... Read More

IRS Announces Guidance on Basis-Shifting Transactions by Related-Party Partnerships

By Maggie Simonson Schild & Christopher L. Nuss | 07.25.2024

On June 17, 2024, the Internal Revenue Service (IRS) and Treasury announced new guidance aiming to curtail abusive basis-shifting transactions by related-party partnerships. The Treasury and IRS plan to propose regulations targeting transactions in which partners shift basis from one asset to another, thereby increasing the second asset’s basis... Read More