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CFR › Title 29 › Subtitle B › Chapter XXV › Subchapter F › Part 2550 › Section 2550.407d-6

29 CFR 2550.407d-6 - Definition of the term “employee stock ownership plan”.

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§ 2550.407d-6
Definition of the term “employee stock ownership plan”.
(a) In general— (1) Type of plan. To be an “ESOP” (employee stock ownership plan), a plan described in section 407(d)(6)(A) of the Employee Retirement Income Security Act of 1974 (the Act) must meet the requirements of this section. See section 407(d)(6)(B).
(2) Designation as ESOP. To be an ESOP, a plan must be formally designated as such in the plan document.
(3) Retroactive amendment. A plan meets the requirements of this section as of the date that it is designated as an ESOP if it is amended retroactively to meet, and in fact does meet, such requirements at any of the following times:
(i) 12 months after the date on which the plan is designated as an ESOP;
(ii) 90 days after a determination letter is issued with respect to the qualification of the plan as an ESOP under this section, but only if the determination is requested by the date in paragraph (a)(3)(i) of this section; or
(iii) A later date approved by the Internal Revenue Service district director.
(4) Addition to other plan. An ESOP may form a portion of a plan the balance of which includes a qualified pension, profit-sharing, or stock bonus plan which is not an ESOP. A reference to an ESOP includes an ESOP that forms a portion of another plan.
(5) Conversion of existing plan to an ESOP. If an existing pension, profit-sharing, or stock bonus plan is converted into an ESOP, the requirements of section 404 of the Act, relating to fiduciary duties, and section 401(a) of the Internal Revenue Code (the Code), relating to requirements for plans established for the exclusive benefit of employees, apply to such conversion. A conversion may constitute a termination of an existing plan. For definition of a termination, see the regulations under section 411(d)(3) of the Code and section 4041(f) of the Act.
(6) Certain arrangements barred— (i) Buy-sell agreements. An arrangement involving an ESOP that creates a put option must not provide for the issuance of put options other than as provided under § 2550.408b-3 (j), (k) and (l). Also, an ESOP must not otherwise obligate itself to acquire securities from a particular security holder at an indefinite time determined upon the happening of an event such as the death of the holder.
(b) Plan designed to invest primarily in qualifying employer securities. A plan constitutes an ESOP only if the plan specifically states that it is designed to invest primarily in qualifying employer securities. Thus, a stock bonus plan or a money purchase pension plan constituting an ESOP may invest part of its assets in other than qualifying employer securities. Such plan will be treated the same as other stock bonus plans or money purchase pension plans qualified under section 401(a) of the Code with respect to those investments.
(c) Regulations of the Secretary of the Treasury. A plan constitutes an ESOP for a plan year only if it meets such other requirements as the Secretary of the Treasury may prescribe by regulation under section 4975(e)(7) of the Code. (See 26 CFR 54.4975-11 ).
[42 FR 44388, Sept. 2, 1977]

Title 29 published on 2012-07-01

The following are only the Rules published in the Federal Register after the published date of Title 29.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2012-07-16; vol. 77 # 136 - Monday, July 16, 2012
    1. 77 FR 41678 - Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2)—Fee Disclosure/Web Page
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      DEPARTMENT OF LABOR, Employee Benefits Security Administration
      Direct final rule.
      This amendment to the 408(b)(2) regulation is effective September 14, 2012, without further action or notice, unless significant adverse comment is received by August 15, 2012. If significant adverse comment is received, the Department will publish a timely withdrawal of this amendment in the Federal Register .
      29 CFR Part 2550

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

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United States Code
USC : Title 5 - APPENDIX

5a USC Rule - Short title

U.S.C. : Title 29 - LABOR

§ 1101 - Coverage

§ 1104 - Fiduciary duties

§ 1108 - Exemptions from prohibited transactions

§ 1112 - Bonding

§ 1135 - Regulations

Statutes at Large

115 Stat. 38

120 Stat. 780

120 Stat. 972

Presidential Documents

Reorganization ... 1978 Plan No. 4

Title 29 published on 2012-07-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 29 CFR 2550 after this date.

  • 2012-12-12; vol. 77 # 239 - Wednesday, December 12, 2012
    1. 77 FR 74056 - Notice of Proposed Amendment to Prohibited Transaction Exemption 2006-06 (PTE 2006-06) for Services Provided in Connection With the Termination of Abandoned Individual Account Plans
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      DEPARTMENT OF LABOR, Employee Benefits Security Administration
      Notice of Proposed Amendment to PTE 2006-06.
      Written comments and requests for a public hearing must be received by the Department on or before February 11, 2013.