EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

An Employee Stock Ownership Plan (ESOP) is a qualified employee benefit retirement plan similar to a 401(k) or a profit-sharing plan that allow companies to provide cost-effective incentives to their employees on a tax advantaged basis.

WHAT ARE SOME OF THE USES OF AN ESOP?

In addition to providing an incentive to employees through a qualified retirement plan, an ESOP can be used to accomplish the following:

• Allow shareholders to sell their stock tax-free while retaining control;
• Raise additional financing or refinance existing debt so that principal,
  as well as interest, is paid with tax-deductible dollars;
• Help solve a retained earnings problem;
• Recapture federal income taxes;
• Provide for the acquisition of another company using tax-deductible dollars;
• Provide for motivation through company ownership at no cost to employees;
• Provide employees with beneficial ownership of stock not actual ownership.

employee stock ownership plan (FOR EMPLOYERS)

Download Our ESOP plan explanation (for employees)