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Employee Stock Ownership Plans (ESOP)

When employees own shares, there are benefits for all

Companies with employee ownership have been routinely shown in studies to outperform their peers. ESOPs are qualified retirement plans where owners share the company with employees; ESOPs can strengthen a company, raise working capital, and help carry out a succession plan.
 
An ESOP is a trust established by a corporation and acts as a tax-qualified, defined-contribution retirement plan. Contributions are made by the sponsoring employer and can grow tax-deferred just as with an IRA or 401(k) plan. However, unlike other retirement plans, the contributions are invested in the company's stock, thus giving employees a piece of the pie — an ownership stake in the company.
 
The benefits for the company include increased cash flow, tax savings, and incentivized staff. The main benefit for the employees is the ability to share in the company's success. 
 

Is an ESOP right for your company and you?

Along with their benefits, ESOPs come with many restrictions and regulations. You can depend on the consultants from Plante Moran to help you look at the feasibility of an ESOP for your organization. As experienced employee benefit consultants, we have helped corporations of all sizes and in many different industries design, create, and administer their ESOPs. We will be able to look at your unique situation, quantify the magnitude of the repurchase liability, and draw on our experience to help you determine if employee stock ownership would fit well with your business strategy.
 
If you decide to move forward with an ESOP, we can help you with the plan design, implementation, and administration.