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business-3152586_1280What 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:

  1. Business Transition Tool – 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.
  2. Employee Ownership Vehicle  An employee stock ownership plan (ESOP) is an optimal employee ownership vehicle for a company to provide employees with an ownership stake in the company.
  1. Qualified Retirement Plan  An employee stock ownership plan (ESOP) is an IRC Section 401(a) qualified retirement plan, similar to a 401(k) Plan, that buys, holds, and sells company stock, providing employees with a retirement plan benefit and additional form of compensation.

Check out this animated video to learn more about ESOPs. 

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