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    What Is An ESOP Infographic 2022

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    Erwin Mainstein
    Employee stock ownership plans (ESOPs) allow business owners to sell some or all of their shares to an ESOP trust for the benefit of employees. The company takes out a loan to purchase the shares, which it pays back over time through contributions to the ESOP trust. As the loan is repaid, shares are allocated to employee accounts according to a non-discriminatory formula. ESOPs provide tax benefits to sellers and companies, and research shows ESOP companies have higher productivity, growth, and wealth generation than comparable non-ESOP companies.

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    What Is An ESOP Infographic 2022

    Uploaded by

    Erwin Mainstein
    18 views1 page
    Employee stock ownership plans (ESOPs) allow business owners to sell some or all of their shares to an ESOP trust for the benefit of employees. The company takes out a loan to purchase the shares, which it pays back over time through contributions to the ESOP trust. As the loan is repaid, shares are allocated to employee accounts according to a non-discriminatory formula. ESOPs provide tax benefits to sellers and companies, and research shows ESOP companies have higher productivity, growth, and wealth generation than comparable non-ESOP companies.

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    What is an ESOP Infographic 2022

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    Employee stock ownership plans (ESOPs) allow business owners to sell some or all of their shares to an ESOP trust for the benefit of employees. The company takes out a loan to purchase the shares, which it pays back over time through contributions to the ESOP trust. As the loan is repaid, shares are allocated to employee accounts according to a non-discriminatory formula. ESOPs provide tax benefits to sellers and companies, and research shows ESOP companies have higher productivity, growth, and wealth generation than comparable non-ESOP companies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views1 page

    What Is An ESOP Infographic 2022

    Uploaded by

    Erwin Mainstein
    Employee stock ownership plans (ESOPs) allow business owners to sell some or all of their shares to an ESOP trust for the benefit of employees. The company takes out a loan to purchase the shares, which it pays back over time through contributions to the ESOP trust. As the loan is repaid, shares are allocated to employee accounts according to a non-discriminatory formula. ESOPs provide tax benefits to sellers and companies, and research shows ESOP companies have higher productivity, growth, and wealth generation than comparable non-ESOP companies.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 1

    WHAT IS AN ESOP?

    Employee stock ownership plans, or


    ESOPs, are a way to sell a business that
    benefits the company, employees, and
    the selling business owners. Business
    owners sell some or all of their shares to
    an ESOP trust, which owns those shares
    on behalf of employees.

    ESOPs can be funded in many ways, but


    usually the transaction involves a loan.
    The company can take out a loan and
    then reloan the funds to the ESOP trust.
    The company makes contributions to the
    trust, which the trust uses to repay the
    loan. Sometimes the person selling the
    shares provides the loan. Almost all
    ESOPs are completely company-funded.
    Employees pay nothing.

    As the loan is repaid, shares become


    available to allocate to employee
    accounts. The allocations must be made
    on a non-discriminatory basis, like
    payscale or a more level formula. With
    limited exceptions, all employees
    participate in the plan.

    The company administers the plan in


    accordance with federal laws and
    regulations that govern issues such as
    contribution and allocation limits,
    vesting, benefit distributions,
    diversification, and more.

    ESOP companies often have ownership


    cultures that encourage employees to
    "think and act like owners." Research
    shows such companies are more
    productive, faster growing, more
    profitable, have less turnover, and
    generate more wealth.

    The Benefits of Selling to an ESOP

    An ESOP can use pretax future corporate


    earnings to buy shares from an owner.

    Sellers can defer taxation on the gain


    depending on the type of corporation.

    The business will also receive numerous tax


    benefits depending on the type of corporation.

    Sell the business at once or gradually


    in installments.

    Sellers can define their role in the


    company moving forward.

    Protects jobs.

    Provides employees with a significant


    retirement benefit.

    Protects the integrity of the business by


    assuring that it will not be dismantled.

    The National Center for Employee Ownership | web: www.nceo.org | email: [email protected]

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