ESOP Price Protection Payments Bill Introduced in House
Representative Ron Kind (D-WI) and co-sponsor Mike Kelly (R-PA) have introduced HR 9286 to treat certain price protection payments from Employee Stock Ownership Plans (ESOPs) as eligible rollover distributions. Price protection payments are made under a price protection agreement and provide a guaranteed minimum price for shares that may temporarily decline in value as a result of the company loaning money to the ESOP to purchase shares.
The proposal would treat certain price protection payments made after December 12, 2019, for plan years ending before January 1, 2023, as eligible rollover distributions if payments were made pursuant to a price protection agreement for distributions due to separation from service, retirement, death or disability. For plan years beginning after 2022, payments made under a price protection agreement as a result of any separation of service of a plan participant (regardless of the reason for such separation) would be eligible for rollover. Price protection payments must be made within a period not to exceed the lesser of five years or the life of the exempt loan following the purchase of employer securities with such loan.