ESOP Blog

Historically, ESOPs were custom written documents produced by lawyers, which had to be submitted to the Internal Revenue Service for approval. These documents could be costly to amend and maintain. With the arrival this summer of IRS pre-approved “checklist driven” ESOP documents (similar to 401(k) ...
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An ESOP may provide a more flexible solution for company owners compared to a traditional company sale. Watch the video to learn more about a leveraged buyout ESOP.   Leveraged Buyout ESOP A leveraged buyout ESOP is a transaction that can take a variety of forms. Simply stated, an ...
[Read more] about What Is a Leveraged Buyout ESOP?

There are multiple classes of stock that an ESOP can own. In our video, we discuss the different classes of stock.   Classes of Stock The Internal Revenue Code defines employer securities for privately held companies as including common stock if the common stock has the highest ...
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Once the ESOP owns all of the company stock, it faces the challenge of how to get stock into the hands of new employees. Watch our video to learn more.   Approaches to Free Up Shares The simplest and most straightforward approach is for the corporation to simply issue and contribute ...
[Read more] about What Can an ESOP Company Do Once the ESOP Owns All the Stock?

ESOPs and ESOP transactions are highly complex. They involve several areas of the Internal Revenue Code including corporate taxation, qualified plan, design and administration, and mechanical tests. It is important to understand how ESOP transactions can potentially trigger excise taxes under the ...
[Read more] about What Are the Tax Risks of an ESOP Malfunction?

A non-leveraged ESOP is a type of ESOP that does not involve borrowed funds to acquire the sponsoring employer’s stock. It is funded by contributions of cash or stock directly from the employer sponsor. In this video, we discuss the tax benefits of non-leveraged ESOPs.   Tax ...
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An ESOP administrative committee focuses on the operation of the plan and on the management of the plan assets. Watch our video to learn about the fiduciary risks of serving on the administrative committee.   Administrative Committee Members The fiduciary risks of administrative ...
[Read more] about What Are the Fiduciary Risks of Serving on the Administrative Committee?

While there are a number of benefits associated with ESOPs, they can present problems and complications. Understanding the fiduciary risks of an ESOP malfunction helps you avoid them. Learn more in our video.   Fiduciary Risks There are two types of fiduciary required under ...
[Read more] about What Are the Fiduciary Risks of an ESOP Malfunction?