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Pension Resource

29 C.F.R. § 2550.407d-6

Definition of the term “employee stock ownership plan”.
CFR 2005 annual edition (revised as of 2005-07-01) · superseded Jul 1, 2006 · last amended by 42 FR 44388, Sept. 2, 1977
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(a) In general
(1) Type of plan. To be an “ESOP” (employee stock ownership plan), a plan described in section 407(d)(6)(A) of the Employee Retirement Income Security Act of 1974 (the Act) must meet the requirements of this section. See section 407(d)(6)(B).
(2) Designation as ESOP. To be an ESOP, a plan must be formally designated as such in the plan document.
(3) Retroactive amendment. A plan meets the requirements of this section as of the date that it is designated as an ESOP if it is amended retroactively to meet, and in fact does meet, such requirements at any of the following times:
(i) 12 months after the date on which the plan is designated as an ESOP;
(ii) 90 days after a determination letter is issued with respect to the qualification of the plan as an ESOP under this section, but only if the determination is requested by the date in paragraph (a)(3)(i) of this section; or
(iii) A later date approved by the Internal Revenue Service district director.
(4) Addition to other plan. An ESOP may form a portion of a plan the balance of which includes a qualified pension, profit-sharing, or stock bonus plan which is not an ESOP. A reference to an ESOP includes an ESOP that forms a portion of another plan.
(5) Conversion of existing plan to an ESOP. If an existing pension, profit-sharing, or stock bonus plan is converted into an ESOP, the requirements of section 404 of the Act, relating to fiduciary duties, and section 401(a) of the Internal Revenue Code (the Code), relating to requirements for plans established for the exclusive benefit of employees, apply to such conversion. A conversion may constitute a termination of an existing plan. For definition of a termination, see the regulations under section 411(d)(3) of the Code and section 4041(f) of the Act.
(6) Certain arrangements barred—(i) Buy-sell agreements. An arrangement involving an ESOP that creates a put option must not provide for the issuance of put options other than as provided under § 2550.408b-3 (j), (k) and (l). Also, an ESOP must not otherwise obligate itself to acquire securities from a particular security holder at an indefinite time determined upon the happening of an event such as the death of the holder.
(b) Plan designed to invest primarily in qualifying employer securities. A plan constitutes an ESOP only if the plan specifically states that it is designed to invest primarily in qualifying employer securities. Thus, a stock bonus plan or a money purchase pension plan constituting an ESOP may invest part of its assets in other than qualifying employer securities. Such plan will be treated the same as other stock bonus plans or money purchase pension plans qualified under section 401(a) of the Code with respect to those investments.
(c) Regulations of the Secretary of the Treasury. A plan constitutes an ESOP for a plan year only if it meets such other requirements as the Secretary of the Treasury may prescribe by regulation under section 4975(e)(7) of the Code. (See 26 CFR 54.4975-11).
Source credit, amendments & notes

[42 FR 44388, Sept. 2, 1977]

29 C.F.R. § 2550.407d-6 — Definition of the term “employee stock ownership plan”. · CFR 2005 annual edition (revised as of 2005-07-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr29-2550.407d-6&asof=1997-07-01 · printed Oct 16, 2026
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  • (a) In general
  • (b) Plan designed to invest primarily in qualifying employer se…
  • (c) Regulations of the Secretary of the Treasury.
Implements
ERISA § 407 (29 U.S.C. § 1107) Limitation with respect to acquisition and holding of employer securities and employer real property by certain plans
Cited by (code & regs)
Glossary
ESOP
Employee stock ownership plan.

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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

EffectiveThroughSourceAmended by
Jul 1, 1997Jun 30, 2006CFR 2005 annual edition (revised as of 2005-07-01) run 12742 FR 44388, Sept. 2, 1977View
Jul 1, 2006Dec 31, 2016CFR 2016 annual edition (revised as of 2016-07-01) run 12742 FR 44388, Sept. 2, 1977View · Redline (sign in)
Jan 1, 2017currenteCFR editorial change effective 2017-01-01 run 242 FR 44388, Sept. 2, 1977View · Redline (sign in)
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