3. Participants & Plan Year Eligibility
Employees must meet certain requirements to qualify for our Employee Stock Ownership Plan (ESOP). This week, we will be covering what requirements employees must meet to participate in our ESOP.
U.S. domestic employees become eligible on the first day of the Plan Year (January 1 – December 31) after they complete one full year of service (12 consecutive months of active employment with at least 1,000 work hours) and are at least 18 years old. The period of 12 consecutive months begins on the employee’s initial hire date and credited with their first hour.
Once eligible, the hours the employee works during the Plan Year are credited to the participation in the same plan year that the employee becomes eligible.
Participation vs. Eligibility is a complex topic. Let’s look at an example.
Marissa, a 30-year-old employee who lives in Madera, California, began her employment on June 15, 2019, working in the Salinas, California, season. She worked to the end of the season in November and was placed on seasonal layoff status by the Company. On March 20, 2020, she returned to work for the new Salinas season. On June 15, 2020, she completed her first 12-months of service with the company (12 consecutive months of service of active status. Yes—employees are still considered active while on seasonal layoff). Marissa continued to work after her 1-year anniversary on June 15th until the end of the 2020 season in November.
In this example, Marissa worked 800 hours between June 15, 2019, and December 31, 2019, for the 2019 Plan Year. In the 2020 Plan Year, she worked 600 hours between January 1, 2020, and June 15, 2020, and she worked 750 hours between June 15, 2020, and December 31, 2020.
When is Marissa eligible to participate in the ESOP?
Marissa is eligible to participate in the ESOP for the 2020 Plan Year since she met all the requirements in the 2020 Plan Year. She is at least 18-years of age, a domestic employee, completed an active status for 12 consecutive months (even though she was on seasonal layoff), and worked a minimum of 1000 hours (800 + 600 = 1400) during her first 12-months of service (June 15, 2019 to June 15, 2020)
Is Marissa eligible to participate in the 2019 Plan Year contribution?
No—during the 2019 Plan Year, she did not meet the 12-month service or the 1,000 hours requirements.
Is Marissa eligible to participate in the 2020 Plan Year contribution?
Yes—Marissa became eligible to participate in the ESOP on June 15, 2020. Because she obtained more than 1,000 hours in 2020, she is eligible for a 2020 Plan Year contribution. She worked 600 hours from January 1, 2020, to June 15, 2020. Remember, June 15th was the date she obtained her 12-months of consecutive service and became eligible to participate in the ESOP. She then worked another 750 hours between June 15, 2020, and December 31, 2020. Therefore, Marissa accumulated, and will be credited for, a total of 1,350 hours (600 + 750) for the 2020 Plan Year.
Next week, we will be learning about Vesting & Distributions.
To get a head start, let’s understand what vesting means. Employees earn ownership of an increasing percentage of their ESOP shares over their years of service; vesting is the amount of time an employee must work for our Company before owning the full amount of their benefit.
1. Introducing Our ESOP Educational Series
2019 marked the third year since the creation of our Employee Stock Ownership Plan (ESOP). For those of you that were eligible for the 2017 distribution and have qualified for each of the subsequent years, you have had three (3) contributions to your stock account...
2. Basics of an Employee Stock Ownership Plan (ESOP)
Hello employee owners! The first topic of our ESOP educational series will be Basics of an Employee Stock Ownership Plan (ESOP). Today’s communication will cover what an ESOP is, how an ESOP works and why the Tanimura and Antle families decided to become an ESOP in...
4. All About ESOP Vesting
In our first few communications, we learned about the Basics of an ESOP and Eligibility. This week, we will be learning about Vesting. The Company highly values its employees and their choice to invest their time and effort as part of the Tanimura & Antle...
5. Employer Contributions & Valuation
You’re eligible for the Employee Stock Ownership Plan (ESOP) and your account is growing year after year. But how do you gain more shares of stock and how do those shares increase (or decrease) in value? This week, we will learn more about how Tanimura & Antle...
6. Understanding Your Annual Statement
Once a year, you will receive a statement that provides you with an update on your Employee Stock Ownership Plan (ESOP) account. The statement will include information on your total number of Company shares, our new Value Per Share, your Total Account Balance, your...