DIVERSIFICATION REQUIREMENTS: EXAMPLE
01.Core Concepts
• KMT Corporation maintains an ESOP that uses the calendar year as the plan year. Boris, a participant in KMT Corporation's ESOP, has participated in the ESOP for more than 10 years before reaching age 55. • He reaches age 55 in Year 1 • End of plan year 1: total 100 shares contributed to account • During 90 days following end of plan year can diversify 25 shares • Chooses to diversify 10 shares • During plan Year 2, an additional 20 shares are contributed to his account • End of plan year 2: total 120 shares contributed to account • During 90 days following end of plan year can diversify 25% x 120 = 30 shares cumulative less the 10 shares previously diversified = 20 shares • Years 3 – 5 calculated in same manner • In 90 days following plan Year 6 can diversify 50%