Can an ESOP make in-service distributions?
Sure, that’s what diversification is. However, some ESOPs allow early diversification or even in-service withdrawals. If you do permit early in-service withdrawals, make sure you “cap” the amount that can be withdrawn individually, and in the aggregate, to prevent a run on the ESOP bank. Can I borrow from my ESOP account? Typically not. Even if you have cash in your ESOP account, maintaining a loan program and coordinating it with any loans available under your 401(k) plan would be too cumbersome. Can I take a “hardship withdrawal” from my ESOP account? This is another 401(k) concept that applies to your deferrals, not employer contributions of stock. Thus, the answer is no. Is there anyway I can accelerate my payments after termination of employment? Perhaps if your ESOP so provides — but the conditions for acceleration generally are not favorable. Assume your ESOP delays payment for 6 years following termination. Many ESOPs, however, will accelerate payment if you become disabled, d
