Employee Stock Ownership Plans (ESOP)
An ESOP is a type of qualified defined contribution plan designed to invest primarily in employer company stock and, in many cases, to make retirement benefits payable in shares of company stock. As an employer, an ESOP provides you flexibility in contribution amounts and allows you the option to borrow money to purchase company stock to be allocated among plan participants.
ESOPs are especially suited to help finance the acquisition of capital goods or the purchase of a competitor or supplier; to make current debt service 100% tax-deductible; or as a retirement plan. The ideal ESOP candidate is a mid-sized or larger C or S corporation with stock available for purchase, which pays or will pay corporate taxes, and which expects to have long-term discretionary profits.
An ESOP provides benefits for all parties as outlined below:
Management Benefits
- Ensures smooth transition of ownership
- Provides increased ownership opportunities
- Enhances overall morale companywide
Company Benefits
- Allows tax-deductible contributions
- Allows tax-deductible dividends
- Provides substantial tax savings
- Enables use of pretax dollars to repay debt
Employee Benefits
- Provides tax-deferred retirement plan
- Rewards employees for productivity
- Builds wealth without personal investment
Selling Shareholders Benefits
- Creates a liquid market for shares at fair market value
- Enables tax-deferred (or tax-free) sale of company stock
- Achieves full or partial liquidity
- Permits partial sale to allow for retaining voting control
- Promotes diversification of assets and net worth
Contact Us
For more information and answers to your questions, please contact SHDR by phone at
1-888-999-4701 or by email.