Employee Stock Ownership Plan (ESOP) may not always be a good move for every business because of the complex operating rules and high legal compliance costs that surround it. Many employees remain skeptical due to several issues including lack of diversification, cash flow difficulties, and share price dilution.
The Department of Labor Regulations on disclosure of 401(k) plan fees and expenses are designed to provide transparency to participants in a user-friendly format, allowing for an apples-to-apples comparison of fees and expenses under a plan’s investment options that impact participant account balances, and a look under the hood on plan administration costs charged to participant accounts. But greater disclosure can lead to greater scrutiny, and an essential duty for plan sponsors is monitoring fees and expenses that could reduce participant account balances, and timely addressing excesses.
With today’s major economic recession faced by businesses due to the ongoing COVID-19 crisis, the Employee Stock Ownership Plans (ESOPs) continues to be an attractive option for companies seeking to address the need for succession planning to sustain competitive advantage in the market and looking to provide their employees with an ownership interest through a retirement plan.
The implementation of several amendments in employee benefit plans by the end of 2021 along with the new requirements for the coming year continue to bring regulatory changes in areas including welfare plan, flexible spending account (FSA), and hardship distribution. These pose new challenges among practitioners in complying with all the legal developments and addressing critical issues in this field.
The work-from-home setup has rapidly become a trend after businesses started shutting down due to the pandemic. Although this setup can be helpful, it presents unique challenges which employers need to face, particularly in the field of wage and hour law. Typical issues several businesses are struggling with, include claims of unpaid wages, timekeeping inaccuracies, and employee misclassification.