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ESOP Information

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ESOP Plan Rules
ESOP Plan Rules ESOP Rules were put in place to oversee employee stock ownership plans (ESOPs). ESOPs provide a company’s workforce with an ownership interest in the company. Rules state that to be an ESOP, the plan must be specifically designated as an ESOP in the plan document, and must comply with employee stock ownership... Read More


Can I use the ESOP to refinance existing corporate debt?
Yes. Refinancing existing corporate debt through an ESOP should improve after-tax cash flow. The refinance is accomplished through a loan to the ESOP which uses the borrowed money to purchase newly issued stock from the company. The company uses the cash to pay off the existing debt, which is thus replaced with ESOP debt. After... Read More


Can an ESOP be terminated?
Yes. Just as a company can terminate a profit sharing plan, it can also terminate an ESOP. At that point, all participants must become 100 percent vested. Benefit distributions from the ESOP are eligible to be rolled over into an IRA; ESOP distributions not rolled over are taxable, but may be eligible for special favorable... Read More


Are ESOP accounts required to be fully invested in company stocks?
ESOPs are not required to invest exclusively in company stock; many ESOPs have substantial investments in cash or other securities. However, ESOPs normally have more than half their assets invested in company stock. In addition, ESOP participants who are approaching retirement age must be given an opportunity to diversify their ESOP accounts. For shares acquired... Read More


Are annual contributions to the ESOP mandatory?
Although annual contributions are not mandatory for each year, the IRS does require that recurring contributions be made to a tax-qualified retirement plan to maintain its qualified status. However, in a leveraged ESOP, employer corporations need to commit to contribute enough cash each year to service the ESOP loan debt. If the ESOP has sufficient... Read More


Lifecycle of an ESOP
Lifecycle of an ESOP As your Plan matures, your ESOP strategies should mature with it. Brian Wurpts applies his 12+ years of ESOP administration, funding, plan design and sustainability experience as he takes you through an overview of the various stages in the lifecycle of a typical leveraged ESOP. Presented by Brian D. Wurpts, Principal &... Read More


Introduction to ESOPs
ESOP ESOP stands for Employee Stock Ownership Plan. ESOPs, like other employee benefit plans, offer advantages to business owners, companies, and employees alike. An ESOP is a retirement plan designed to provide employees with an ownership interest in the company by investing primarily in stock of the employer. ESOPs are unlike other retirement plans, which... Read More


Understanding ESOPs
Understanding ESOPs This article provides an overview of ESOPs and includes comments from Jim Steiker. Published March 2011 in Financier Worldwide Magazine Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay our Introduction to ESOPs webinar. If you would like further information about ownership transition... Read More


The ABCs of ESOPs
The ABCs of ESOPs Jim Steiker joins other ESOP experts in discussing why engineering firms can be ideal candidates for Employee Stock Ownership Plans & ESOP Contributions. Published in the March/April 2005 issue of Engineering, Inc. Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or... Read More


Selling In: Liquidity & Succession Using an ESOP
Selling In: Liquidity & Succession Using an ESOP Jim Steiker authored this article, which provides a high-level overview of ESOPs, how they work and how they can benefit multiple stakeholders. Published Spring 2006 in MHEDA Journal Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay... Read More


Partial Plan Terminations & Their Impact on ESOP Companies in a Difficult Economy
Partial Plan Terminations & Their Impact on ESOP Companies in a Difficult Economy Download this eBook (PDF) The economic environment over the last eighteen months has had a negative impact on many ESOP companies. Reduced earnings, lower valuations, and tight credit markets have been a challenge. But there is a less obvious complication for ESOP... Read More


What is an ESOP?
ESOP stands for employee stock ownership plan. ESOPs provide a company’s workforce with an ownership interest in the company. In an ESOP, companies provide their employees with stock ownership, often at no up-front cost to the employees. ESOP shares, however, are part of employees’ remuneration for work performed. ESOP shares are allocated to employees and... Read More


Infographic: ESOPs in Seven Sentences
Infographic: ESOPs in Seven Sentences The challenge with ESOPs is to let people absorb the basics before moving on. Here are the seven sentences you should know about your ESOP. Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay our Introduction to ESOPs webinar.... Read More


ESOPs in S Corporations
ESOPs in S Corporations This article, co-authored by Jim Steiker, highlights the potential for abuse and scams and explains how to avoid them. Published Spring 2004 in the Philadelphia Estate Planning Council Newsletter Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay our Introduction to... Read More


Co-Ops and ESOPs Offer Strengths and Challenges
Co-Ops and ESOPs Offer Strengths and Challenges SES Advisors Jim Steiker outlines some of the pros and cons of worker cooperatives. Published May 23, 2011 in The Philadelphia Inquirer Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay our Introduction to ESOPs webinar. If you... Read More


ESOP FAQ | How ESOPs Work
Employee Share Ownership Plan | How do ESOPs work? Employee Share Ownership Plans (ESOPs) are also known as Employee Stock Ownership Plans. ESOPs provide a company’s workforce with an ownership interest in the company.Employee Share Ownership Plans allow companies to provide their employees with stock ownership, often at no up-front cost to the employees. Employee... Read More


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