Form 5309 Application for Determination of Employee Stock Ownershi

Form

5309

(Rev. January 2012)
Department of the Treasury
Internal Revenue Service

Application for Determination of
Employee Stock Ownership Plan

OMB No. 1545-0284

(Under section 4975(e)(7) of the Internal Revenue Code)
▶ Attach

1

Name of plan sponsor (employer if single-employer plan)

2

Employer identification number (EIN)

3

to Form 5300.

For IRS Use Only

Plan number

All Plans (Complete lines 4a through 4k.)
Yes No
4a

Is the plan designated as an employee stock ownership plan (ESOP) within the meaning of section 4975(e)(7)?

b

Is the plan designed to invest primarily in employer securities as defined in section 409(l)?

c

Is each participant or beneficiary entitled to direct the plan to vote the allocated securities as required by section
409(e)?

d

Does the plan provide that each participant who is entitled to a distribution from the plan has a right to demand
that the benefit be distributed in the form of employer securities?
If the answer to d is “No,” please answer the following questions:
(i)

(ii)

If the charter or bylaws of the corporation restrict substantially all outstanding stock ownership to employees or to
a 401(a) trust, does the plan provide that participants are entitled to receive distributions in cash, except that such
plan may distribute employer securities subject to a requirement that such securities may be resold to the
employer under a fair valuation formula? (See section 409(h)(2))
If the plan is maintained by an S corporation, does the plan provide that participants are entitled to receive
distributions in cash, except that such plan may distribute employer securities subject to a requirement that such
securities may be resold to the employer under a fair valuation formula? (See section 409(h)(2))
If the plan is established and maintained by a bank which is legally prohibited from redeeming or purchasing its
stock, does the plan provide that participants are entitled to receive distributions in cash? (See section 409(h)(3))

e

If the trust makes a distribution in stock and the securities are not readily tradable on an established market, can
the participant require the employer to repurchase the securities under a fair valuation formula within the time
frames prescribed by law? (See section 409(h)(1)(B))

f

If the plan holds employer securities consisting of stock in an S corporation, does the plan provide that no portion
of the assets of the plan attributable to (or allocable in lieu of) such employer securities may, during a
nonallocation year, accrue (or be allocated directly or indirectly under any section 401(a) plan of the employer) for
the benefit of any disqualified person? (See section 409(p))

g

Does the plan provide that a qualified participant may elect to diversify a portion of his or her account investment
in employer securities, as described in section 401(a)(28)(B)?

h

If the answer to h is “No,” please answer the following question:
(i)
i

Does the plan provide that an applicable individual may elect to diversify a portion of his or her account
investment in employer securities as described in section 401(a)(35)?
With respect to activities that are carried on by the plan, are all valuations of employer securities acquired after
December 31, 1986, which are not readily tradable on an established securities market, made by an independent
appraiser? (See section 401(a)(28)(C))

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 11835F

Form 5309 (Rev. 1-2012)

Page 2

Form 5309 (Rev. 1-2012)

Yes No
Does the plan provide that a participant may begin receiving a distribution of his or her account that is attributable
to employer securities after the participant has separated from service upon reaching normal retirement age, or after
death, disability, or other separation from service, within the time frames specified in section 409(o)?

j

If the plan is maintained by a C corporation, does the plan provide that the assets of the plan attributable to (or
allocable in lieu of) employer securities acquired by the plan in a sale to which section 1042 applies cannot accrue
(or be allocated directly or indirectly under any section 401(a) plan of the employer) for the benefit of persons
specified in section 409(n) during the nonallocation period?

k

Plans Applying Under Section 4975(d)(3) and Regulations Section 54.4975-7 (Leveraged ESOPs) (Complete lines 5a through 5g.)
5a
b
c

d

e

Does the plan provide that the exempt loan proceeds must be used within a reasonable time to acquire qualifying
employer securities, repay such loan, or repay a prior loan as required under Regulations section 54.4975-7(b)(4)?
Does the plan provide for the establishment and maintenance of a suspense account as required under Regulations
section 54.4975-11(c)?
Does the plan provide that the collateral must be limited to qualifying employer securities purchased with such
exempt loan or qualifying employer securities used as collateral on a prior exempt loan repaid with the proceeds of
the current exempt loan as required under Regulations section 54.4975-7(b)(5)?
Does the plan provide that no person entitled to payment under an exempt loan shall have any right to assets of the
ESOP other than collateral given for such loan, contributions (other than contributions of employer securities) made
to repay such exempt loan, and earnings attributable to such collateral and the investment of such contributions as
required under Regulations section 54.4975-7(b)(5)?
Does the plan provide that payments made with respect to an exempt loan by the ESOP during the year must not
exceed an amount equal to the sum of contributions and earnings received during or prior to such year less such
payments in prior years as required under Regulations section 54.4975-7(b)(5)?

f

Do plan terms provide that qualifying employer securities will be forfeited only after other assets as required under
Regulations section 54.4975-11(d)(4)?

g

Does the plan provide that the protections and rights provided to participants and beneficiaries with respect to
employer securities are nonterminable as required in Regulations section 54.4975-11(a)(3)(i) and (ii)?

Under penalties of perjury, I declare that I have examined this application, including accompanying statements and schedules, and to the best of my
knowledge and belief, it is true, correct, and complete.
Date ▶

SIGN HERE ▶
Type or print name

Type or print title

Form 5309 (Rev. 1-2012)

Page 3

Form 5309 (Rev. 1-2012)

What's New
The IRS has created a page on
IRS.gov for information about
Form 5309 and its instructions, at
www.irs.gov/form5309. Information
about any recent developments
affecting Form 5309 will be posted
on that page.

General Information
Section references are to the Internal
Revenue Code unless otherwise
noted.
Use this form to apply for a
determination letter for an employee
stock ownership plan (ESOP) that
meets the requirements of section
4975(e)(7). Attach Form 5309 to
Form 5300, Application for
Determination for Employee Benefit
Plan.
The plan you establish must be
designed to invest primarily in
employer securities. For a definition
of employer securities and how it
applies to your plan, see section
409(I) or section 4975(e)(8). Also see
Regulations section 54.4975-11 for
the formal plan requirements of an
ESOP.
More information. For more
information about the latest
developments on Form 5309 and its
instructions, go to www.irs.gov/
form5309.

General Instructions
A Change To Note
The questions with regard to tax
credit ESOPs have been deleted. If
your plan involves such a plan,
please state so in the cover letter
and refer to Regulations section
1.46-8(d) for the formal requirements
of a tax credit ESOP. The question
relating to type of plan has been
deleted from the form.
Who May File
1. Any corporate employer who
has established an ESOP intended
to meet the requirements under
section 4975(e)(7).
2. Any corporate employer who
amends an ESOP under section
4975(e)(7).

An S corporation-sponsored ESOP
must provide that no prohibited
allocation of employer stock may be
made to a disqualified person for a
nonallocation year. This applies to all
plan years beginning on or after
January 1, 2005. This applies to plan
years ending after March 14, 2001, if:
1. The ESOP was established after
March 14, 2001, or
2. The ESOP was established on
or before March 14, 2001, if the
employer maintaining the ESOP had
not made an S-corporation election
in effect on such date.
How To Complete the Application
• If a number is requested, a number
must be entered.
• If an item provides a box to check,
written responses are not
acceptable.
• The application has formatted
fields that will limit the number of
characters entered per field.
• All data input will need to be
entered in Courier 10 point font.
• Alpha characters should be
entered in all capital letters.
• Enter spaces between any words.
Spaces do not count as characters.
What To File
To receive a determination on
whether a plan, initially or as a result
of a plan amendment, meets the
requirements of section 4975(e)(7),
submit Form 5309, Form 5300, and
a copy of all documents and
statements required by those forms.
Attach the completed Form 5309 to
Form 5300.
Signature
Form 5309 must be signed by the
principal officer authorized to sign.
Note. Stamped signatures are not
acceptable; see Rev. Proc. 2012-4,
2012-1 I.R.B. 125, at www.irs.gov/
pub/irs-irbs/irb12-01.pdf.

Paperwork Reduction Act Notice.
We ask for the information on this
form to determine whether you meet
the legal requirements for the plan
approval you request. Your filing of
this information is only required if you
wish the IRS to determine if your plan
qualifies under section 4975(e)(7).
You are not required to provide
the information requested on a form
that is subject to the Paperwork
Reduction Act unless the form
displays a valid OMB control
number. Books or records relating to
a form or its instructions must be
retained as long as their contents
may become material in the
administration of any Internal
Revenue law. Generally, tax returns
and return information are
confidential, as required by section
6103.
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated average time is:
Recordkeeping . . 6 hr., 13 min.
Learning about the
law or the form . . 2 hr., 10 min.
Preparing and
sending the form
to the IRS . . . . 2 hr., 22 min.
If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the
Internal Revenue Service, Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111
Constitution Ave. NW, IR-6526,
Washington, DC 20224.