If the closing date is approaching on the purchase/sale of your or your client's company and you still don't have a plan for transitioning employee benefits, the result can be a train wreck. The seller can end up with liabilities they didn't expect and the buyer can end up with unhappy new ...
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ESOP Feasibility vs. Suitability
Hello Mr. Long… We're thinking about doing an ESOP and heard that we need a feasibility study. Do you do that? That's the way these conversations usually start. The client is thinking about an ESOP and may have been told that the first thing they need is a feasibility study, and perhaps an appraisal ...
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How An ESOP Program Is Put Together – Some Assembly Required
Updated February 8, 2021
Unlike the typical 401(k) plan, ESOPs aren't an "off-the-shelf" retirement plan.
Until recently, each ESOP plan had to be individually designed to serve a specific set of purposes. The IRS recently allowed ESOP plan documents to be more like a 401(k) plan – with ...
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The Truth About S Corporation ESOPs
In 1996, Congress enacted legislation[1] that for the first time permitted an employee stock ownership plan (ESOP) to be an eligible S corporation shareholder, effective for tax years beginning after December 31, 1997. In 1997 the law was modified further to facilitate ESOPs becoming S corporation ...
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Who Are the ESOP’s Trustees and How Do I Determine That?
ESOP trustees are selected by the Board of Directors. Watch our video to learn more about how to choose your ESOP trustees.
ESOP Trustees
The law requires the board to be responsible for the prudent selection, monitoring, removal, and ultimately, replacement of the trustees. The ...
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Who Is Legally Responsible for Valuing the ESOP Stock?
The ESOP appraisal process is the legal responsibility of the trustee. Learn more about the process in this video.
ESOP Valuation
The ESOP trustee is the owner of the shares and must report the value of the stock annually. The trustee is also required by law to use a ...
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Who Votes the Shares Held in the ESOP?
The Code requires that company stock in the ESOP must have full voting rights. In this video, we discuss who votes the shares held in the ESOP.
Voting Rights for ESOP Participants
Since the ESOP trustee is the shareholder, the trustee is required by law and has a fiduciary duty by ...
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Who Participates in the ESOP?
Since an ESOP is a qualified retirement plan, it is subject to the same eligibility and coverage rules as other plans such as profit-sharing plans. Watch our video to learn more about who participates in the ESOP.
ESOP Participation
Generally, the ESOP plan covers all employees ...
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Who Decides How to Use ESOP Dividends?
ESOP dividends are earnings of the trust and subject to the investment decisions of the ESOP trustee. Learn more about who decides how to use ESOP dividends in our video.
ESOP Dividends
ESOP dividends are typically planned for and structured when transactions are put together and ...
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Confused by the terminology? Check our Glossary of Terms