Client Update: Annual Allocation ESOP Process

The annual allocation ESOP process can seem overwhelming with multiple deadlines, advisors, and moving parts to monitor.

Client Update:
Annual Allocation ESOP Process

March 24, 2016
By Tina Fisher (215.508.7717,

The annual allocation ESOP process can seem overwhelming with multiple deadlines, advisors, and moving parts to monitor. Not only are there deadlines for disclosures to participants and filing with government agencies, but the Company may have employee meetings or events that are driving the desired timing of reports. Meeting these deadlines may involve several individuals at the Company, as well as the Trustee, Third-Party Administrator, Attorney, Accountant, Valuation Firm, and Plan Auditor. A recommended best practice tool to manage the allocation process is to prepare either an ESOP Action Item Timeline, an ESOP Administration Calendar or a hybrid of the two.

The ESOP Action Item Timeline is a generic timeline listing all required regulatory deadlines relating to tax filings, disclosures to participants, and distributions requirements. This timeline is applicable to all plans with the exception of a non-calendar year plan which would need to adjust some of the dates to reflect the correct plan year end. This timeline is ideal for an ESOP without a lot of complications or to-do items throughout the year.

While an ESOP Action Item Timeline provides a minimal listing of deadlines not to be forgotten, a customized ESOP Administration Calendar is an incredibly useful tool for taking a complicated process and breaking it down into individual tasks assigned to the responsible party for completing the task and the due date for completion. The best time to prepare this calendar is when the dust has settled from the prior plan year and before the start of a new plan year, for example in December before the start of a new calendar year plan. The Company and your administrator at SES should set aside some time to talk through expectations for the upcoming plan year and agree on the deliverables that need to be included, the person responsible for the task, and the date the item is scheduled to be completed. Following are some tips for preparing a successful ESOP Administration Calendar:

  1. Pick your key deliverables and the final date of accomplishment and then work your way backwards from there. For example, if you have an all employee meeting scheduled for August 15th at which you plan to hand out participant statements, plan reasonable increments to complete the tasks leading up to this date.
  2. Assign a person at the Company who is responsible for the calendar. This includes making sure that the all parties are on task, ensuring delivery of items to individuals that are needed to meet a deadline, and
    communicating changes to the calendar to all involved parties. Even if all deadlines are being met and there are no changes to the calendar, the “Actual Date” section on the calendar can be completed and forwarded on occasion to the group to remind everyone where the process is at any given time.
  3. The calendar is a fluid tool. While all parties are committed to staying on task, the unexpected can always happen. When it does, the calendar should be updated and remaining due dates adjusted to account for the change.
  4. The calendar can be as simple or as detailed as the Company desires, replacing the regulatory timeline or combining the items from the timeline with the administration calendar items. If the Company has multiple plans (for example, a 401(k) Plan) they may want to combine the deadlines for both plans into one calendar.

Attached is a sample ESOP Administration Calendar that can be customized to fit your plan’s needs. Communication to SES regarding your expectations is key to the administration of your ESOP and to a successful relationship with SES. Please contact your SES administrator and let us know how we can help you further.


If you have any questions regarding this process, please contact Tina Fisher at 215.508.7717 or