Maximizing Value When Developing ESOP's The first thing an executive or business owner should understand is that an employee stock ownership plan (ESOP) is a qualified retirement plan. Accordingly, it has many of the same requirements as 401(k) plans and similar qualified retirement plans. In addition to being a qualified retirement plan, ESOPs have special statutory requirements and tax incentives for their adoption and maintenance. They are also excellent corporate financing vehicles, and can be utilized to provide more cost-effective succession in ownership. Many owners view ESOPs as a buyer they can control and dominate, although the requirements and protections built into the laws quickly disabuse them of this perception. ESOPs can be the strongest and best economic buyer in the marketplace for the owner’s shares. In many cases, it is the only buyer who can deliver a tax-free sale.ESOPs have two major attributes that distinguish them from other qualified retirement plans:
Other advantages and uses of ESOPs include the following: Click here for more information. |
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