HR Compliance Library, ¶16,954, Overview of employee stock ownership plans

摘要

An employee stock ownership plan (ESOP) is a qualified stock bonus plan or a qualified stock bonus plan andrnmoney purchase plan. Like a stock bonus plan, the contributions need not be dependent on profits, and benefitsrnare distributable in the stock of the employer corporation. Typically the employee stock ownership plan is usedrnas a financing vehicle for the employer corporation — the plan borrows money with which to purchase employerrnstock and the borrowed money is paid to the employer (or other shareholders) for its stock. The loan is repaidrnwith annual employer contributions. Furthermore, the employer contributions to the ESOP are fully deductible asrnqualified plan contributions by the employer. This type of ESOP is a leveraged ESOP.