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Employee Stock Ownership Plans (ESOP)
An employee stock ownership plan (ESOP) is a qualified retirement plan that is funded primarily with employer stock. Ideal for mid- to large-sized corporations with stock available for purchase.
- Flexible contribution amounts
- Option to borrow funds to purchase stock for distribution
- Suited for key executives and rank-and-file staff
Sponsor Benefits
ESOPs allow participants to become part owner of your company, serving as incentive to keep profits healthy. ESOPs also serve as a method of corporate finance, because the sponsor can borrow money to purchase stock. Plans are especially suited to finance acquisitions and capital projects and to make current debt service 100% tax-deductible.
- Valued retirement benefit and executive compensation program
- Vehicle for corporate finance
- Employee incentive program
Participant Benefits
ESOPs provide employees a sense of ownership and purpose. When used as executive compensation, ESOPs allow your high-value employees to maximize their earnings by deferring their compensation until they retire or leave your organization.
- Benefits are vested after a specified term
- Earnings grow tax-free
- Includes provisions for diversification
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