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ESOP Plans for Your Business

Employee stock plans — give them ownership like never before.

Why Offer an Employee Stock Ownership Plan?

Besides considerable tax benefits for you, having a vested interest in the company makes employees feel more valued and incentives performance. ESOP contributions tend to be larger than profit sharing contributions so accounts can potentially grow faster all the while accumulating tax-deferred. Employees realize even more benefit when the plan is enhanced by a 401(k) feature.If the company’s stock does well, employees are rewarded for their hard work.

Enables employees to become owners of the company by granting them shares of stock. This ownership stake fosters a sense of pride, loyalty, and commitment among employees. When employees have a financial stake in the company’s success, they often demonstrate increased engagement, productivity, and dedication to achieving company goals.

Serves as a retirement benefit for employees. As the company’s stock value increases over time, employees’ ESOP accounts grow, providing them with a substantial retirement nest egg. ESOPs can be a valuable component of a comprehensive retirement plan, allowing employees to accumulate significant wealth and financial security for their post-employment years.
Offers tax advantages for the company implementing the plan. Contributions made by the company to the ESOP can be tax-deductible, helping to reduce the company’s taxable income. Furthermore, if a company is structured as an S corporation, it may be eligible for additional tax benefits, such as avoiding federal income tax on the portion of company earnings attributable to the ESOP-owned shares.

ESOPs can be an effective tool for business owners to transition ownership and plan for succession. Selling shares to the ESOP allows owners to gradually exit the company while maintaining continuity and preserving the business’s legacy. It provides a structured mechanism for transferring ownership to employees, ensuring the business’s continued operations and stability over the long term.

What We Handle

3(16) Recordkeeping and Administrative Services

The goal of a 3(16) fiduciary is to take on some or all of the employer’s fiduciary duties related to plan administration and reduce the administrative hassle involved in managing 401(k) plans, ESOP plans, or KSOP plans.

Employee Education and Enrollment Services

We provide in-person or online enrollment meetings as well as full access to our financial advisors.

Plan Audit Assistance

We prepare and gather all information needed for your plan audit so you don’t have to. 

ESOP Testing and Processes

We will handle disqualified persons, synthetic equity, 409(p) anti-abuse rules and testing, share release calcuations, and S corp distrubtion and dividend processing.

Can you combine a 401(k) & an ESOP?

Yes, a KSOP is an alternative to a company sponsoring both an ESOP and a separate 401(k) plan. Maintaining one plan instead of two can be more cost effective and efficient.

Benefits include:

Employers can make contributions to both the ESOP and the 401(k) plan. Contributions to the ESOP are used to purchase employer stock, while contributions to the 401(k) plan can be used to match employee contributions.
ESOP participants may have the opportunity to diversify their retirement savings by rolling over a portion of their ESOP distributions into the 401(k) plan or other investment options, allowing for greater diversification beyond the company stock.

You Manage the Business — We’ll Invest in the Rest

Learn how easy it is to enroll, manage, and help your employees save for retirement.