What is diversification?
Diversification within your OwnersEdge ESOP account
means moving the portion of your account balance
invested in company shares to investment options
outside the OwnersEdge ESOP.
To be eligible to diversify, you must meet two
requirements:
1.
You must be at least 55 years old, AND
2.
Have 10 years of participation in the plan
Once you meet these requirements, you will be notified by
your human resources department with more information
about your diversification options.
DID
YOU
Your OwnersEdge ESOP account may
hold both company shares and cash.
Since diversification is the process
of moving your shares to other
investments, any cash held in your
OwnersEdge ESOP account is not
eligible for diversification.
How does diversification work?
The diversification process takes place over a six-year
period, once you are eligible.
1.
During the first five years of diversification, you
may diversify up to 25 percent of the shares held
in your OwnersEdge ESOP account.
2.
In the sixth year, you may diversify up to 50
percent of the shares held in your OwnersEdge
ESOP account.
Note: There is no legal requirement to provide this
opportunity once the six-year period ends.
This opportunity is available to you as long as you are a
participant in the OwnersEdge ESOP, regardless of whether
you are a current or former employee.
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Q&A
Do I have to diversify my account when I
meet the requirements (age 55 with 10
years of OwnersEdge ESOP plan
participation)?
No. Once you meet the requirements to begin the
diversification process, it is your choice whether or
not you choose to diversify your shares. However,
diversification allows you to move some of your
account invested solely in OwnersEdge shares into
other types of investment options held outside the
company. As you near retirement, it may be a
good idea to review your overall retirement
strategy, considering both company shares and
your mix of cash and other investments.
Will I have to make a written election every
year during the six-year period that I am
eligible to diversify my OwnersEdge
shares?
Yes. You will be notified by your human resources
department to make a diversification election
immediately following the last day of the first plan
year in which you meet the requirements to begin
the diversification process. At that time, you will
need to make an election as to whether or not you
would like to begin diversifying your shares. For
each year (6 years total) that you are eligible to
diversify shares, you will make your election during
a designated window.
EXAMPLE:
Let’s look at Sara as an example. Sara will be
Q&A
55 years old in May 2015, and she will have participated in the
OwnersEdge ESOP for more than 10 years.
For the 2015 plan year, she will be notified that she is eligible to move up to 25
percent of the company shares in her account to other investment options.
She elects to diversify 15 percent of her share balance in this first year. If Sara
had 800 shares in her account at the end of the 2015 plan year (December
31), then 15 percent of her account, or 120 shares, would be transferred after
the 12/31/2015 valuation was completed (around summer 2016). Following
the transfer, Sara has 680 shares remaining in her OwnersEdge ESOP
account.
For 2016 (the second year), she would again be notified she can move up
to 25 percent of her shares of company stock. However, the 25 percent
she is eligible to diversify includes the 120 shares she diversified the first
year. Sara elects to diversify the maximum 25 percent. For purpose of
this example, assume her account balance in the OwnersEdge ESOP
increased due to company contributions, and as of December 31, 2016,
she has 880 shares in her OwnersEdge ESOP account. Her
diversification transfer for Year 2 would be calculated as follows.
880
+ 120
1,000
x 25%
250
- 120
130
shares
shares
shares
2016 account balance
2015 diversification transfer
Sara’s 2016 diversification election
shares
shares
shares
2015 diversification transfer
Eligible diversification transfer
amount for 2016 plan year
For 2017 (the third year), she would again be notified of her right to
diversify up to 25 percent of her account balance, including prior
amounts diversified. Assume her account balance increased to 790
shares, and she elects to diversify 25 percent. Year 3 would be
calculated as follows.
790
+ 120
+ 130
1,040
x 25%
260
- 120
- 130
10
shares
shares
shares
shares
2017 account balance
2015 diversification transfer
2016 diversification transfer
Sara’s 2017 diversification election
shares
shares
shares
shares
What happens if I choose NOT to diversify
any shares once I meet the requirements,
and my six-year period ends?
Once your six-year diversification window
closes, your opportunity to diversify any
shares will expire, and you will not be given
another option to diversify at a later date.
Therefore, you will want to think carefully
before making your diversification elections,
taking into consideration your total retirement
picture.
What can I do with diversified funds?
The shares you elect to diversify will be sold to
the company based on the most recent share
price. You will receive the value of diversified
shares in cash. You may then choose to
deposit the value into an outside IRA, transfer
to the 401(k) plan, or take it as cash. If you roll
it over, you must deposit the entire value of
the amount distributed to you, including
amounts withheld. If you keep the cash, you
will be subject to taxes on the amount you
receive.
Will I have to pay taxes on company shares
I diversify?
Yes, if you do not complete a rollover to an
outside IRA or to the 401(k) plan either directly
or within 60 days of receiving the cash. We
advise you to consult your tax advisor before
making any decisions regarding
diversification.
2015 diversification transfer
2016 diversification transfer
Eligible diversification transfer
amount for 2017 plan year
This process is repeated for 2018 (fourth year), 2019 (fifth year), and 2020 (sixth
year). The only difference is that for the sixth year, her eligible diversification
election would be up to 50 percent.
April 2016
This fact sheet provides basic OwnersEdge ESOP information. When making decisions about our
benefits, please refer to the Summary Plan Description for details and consult with a tax advisor.