Hess v. Reg-Ellen MacHine Tool Corp. Employee Stock Ownership Plan

**Hess v. Reg-Ellen Machine Tool Corp. Employee Stock Ownership Plan** Two brothers who worked at Reg-Ellen Machine Tool Corporation sued their company's employee stock ownership plan (ESOP). The Hess brothers wanted several things from the plan: the ability to roll over their distributions to other retirement accounts, to have their accounts separated and liquidated, and to diversify their investments under federal retirement law (ERISA). The federal appeals court ruled against the brothers on all counts. The court affirmed a lower court's decision that sided with the company's retirement plan, rejecting each of the brothers' requests. **What This Means for Workers:** This case shows that employees in company stock ownership plans may have limited control over how they can manage their retirement investments. Workers cannot always force their ESOP to allow rollovers to other accounts, separate their holdings, or diversify away from company stock, even when they want more investment flexibility. If you participate in an employee stock ownership plan, it's important to understand that these plans operate under specific rules that may restrict your options compared to other types of retirement accounts. The plan's terms and federal law will determine what choices you have.