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:
- 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.
- 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.
- 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.