This bill amends tax rules governing employee stock ownership plans by allowing certain price protection payments to be treated as eligible rollover distributions. Price protection payments are compensation made to employees or beneficiaries when they receive distributions of employer stock from an ESOP after the company has taken out a loan to purchase that stock, with the payment covering any difference between the stock's value at purchase and its value at distribution. For distributions before 2025, these payments qualify for rollover treatment if made to participants who separate from service due to retirement, death, or disability. After 2024, the payments qualify if made through an ESOP that offers protection for separations regardless of reason. The bill also clarifies that price protection agreements do not violate tax rules against discrimination in employee benefit plans and exempts these payments from contribution deduction limits for employers. The legislation takes effect for payments made after December 12, 2019, with some provisions applying to plan years ending after December 31, 2024.
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