What is an Employee Stock Ownership Plan (ESOP)?
ESOP stands for Employee Stock Ownership Plan. An ESOP is a qualified retirement plan that can be used as a business transition tool and as an employee ownership vehicle:
An ESOP is a Business Transition Tool
ESOP stands for Employee Stock Ownership Plan. An ESOP is a qualified retirement plan that can be used as a business transition tool and as an employee ownership vehicle.
An employee stock ownership plan (ESOP) is a business transition tool that establishes an ESOP trust to be an ongoing perpetual owner of the company.
As a financial advisor, your sole responsibility is the financial health of your clients. For clients who own a business, that includes the eventual transition of their company to new ownership. Are you prepared to guide them through this transition and to handle the significant shifts in their portfolio that will inevitably come about?
It’s important for your ESOP administration provider to do more than just administer your organization’s ESOP plan. They should work with you to make sure your plan meets federal rules and regulations, and that’s exactly the approach ESOP Partners takes. We look at your plan from every angle to ensure it will support your long-term objectives. This holistic, problem-solving approach helps you make the right decisions for your employees and the organization as a whole. Learn more about this 360-view by watching this video!
We’re in the heart of the holiday season and this time of year often inspires us to be more giving. We give to our favorite causes, through our time, talent and treasure. We make a greater effort to spread wealth to others. This could be in the form of a warm jacket, a hot meal, a financial donation or sharing with a friend how we have been positively impacted by employee ownership (ESOP). Generosity comes in many forms.
I have spent a lot of time talking about the top benefits of implementing an ESOP for a company, the business owner(s), management and key employees, all employees, and the local community. These benefits include the tax and cash flow benefits and the many competitive benefits of building an ESOP ownership culture.
I talk to a lot of business owners and management that are considering implementing an ESOP and their #1 concern is control.
On one hand business owners appreciate the control premium that an ESOP can pay for a change in control.
On the other hand, they are very concerned about the unknown about what a change in control means and doesn’t mean.
Fast forward a few years and many business owners will tell you that moving to a more formal board with some outside board members was one of the top benefits of implementing an ESOP.
It is important to understand the corporate governance and ESOP stakeholders, what is an ERISA fiduciary, and the relationship between the ESOP Trustee, Board of Directors, and the ESOP Committee.
What is Corporate Governance?
Corporate governance is how corporations manage the business affairs of the company to achieve their corporate and shareholder objectives.
Who are the Corporate Governance Stakeholders?
Who are the ESOP Stakeholders?
What is an ERISA Plan Fiduciary?
A plan fiduciary is a person that exercises discretionary authority or control over the management of the plan or plan assets. ERISA defines the four primary duties of an ERISA fiduciary:
What is the Relationship between the ESOP Trustee, Board of Directors, and the ESOP Committee?
The IRS has announced the 2020 pension plan limits, including the following: