• user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:0efc1f3f02da6099b2ae3eb232fdfbe8' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h1>Employee Stock Ownership Plans</h1>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:0efc1f3f02da6099b2ae3eb232fdfbe8' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:5cc5ac42e7c1100fb17bb12e422c939b' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2 style=\"margin: 0in 0in 0pt; line-height: 15pt\"><span style=\"font-family: Arial\"><font size=\"4\">What is an Employee Stock Ownership Plan - ESOP ?<o:p></o:p></font></span></h2><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">An <strong><span style=\"font-family: Arial\">employee stock ownership plan</span></strong>, or <strong><span style=\"font-family: Arial\">ESOP</span></strong> for short, is a stock bonus plan that invests <a href=\"/bonds/corporate-bonds.html\">corporate</a> profits back into the stock of sponsoring employer by rewarding employees with company stock.&nbsp; An ESOP is a <a href=\"/personal-finance/qualified-plans.html\">qualified plan</a>&nbsp;and therefore, provides special tax benefits to the sponsoring employer, plan participants, and even the shareholder who sold the shares which were made available to the ESOP.<o:p></o:p></span></p><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">ESOPs are defined contribution plans which consist of a stock bonus plan or a hybrid which has a combination of&nbsp;a stock bonus plan and a <a href=\"/personal-finance/money-purchase-pension-plan.html\">money purchase pension plan</a>.&nbsp;<o:p></o:p></span></p><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">Employee stock ownership plans keep the employees focused on bettering the company and thus, becomes a win-win proposition for all parties involved.&nbsp;&nbsp;<o:p></o:p></span></p><h2 style=\"margin: 0in 0in 0pt; line-height: 15pt\"><span style=\"font-family: Arial\"><font size=\"4\">What are the Contribution Limits in an ESOP?<o:p></o:p></font></span></h2><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">The ESOP is similar to a profit sharing plan or a money purchase pension plan in that&nbsp;it&nbsp;caps the employee benefit out at the lesser of the following two; 25% of their annual salary&nbsp;or $45,000.<o:p></o:p></span></p><h2 style=\"margin: 0in 0in 0pt; line-height: 15pt\"><span style=\"font-family: Arial\"><font size=\"4\">When can I Withdraw the Funds in my ESOP?<o:p></o:p></font></span></h2><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">In most cases, employer ESOP contributions <a href=\"/personal-finance/vesting.html\">vest</a> 100% after 5 years.&nbsp; This would mean that the employee would be able to sell 20% of the contribution every year for&nbsp;5 years.<o:p></o:p></span></p><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">Alternatively, vesting can occur based on the number of years of employment with that company.&nbsp; Some companies will mandate that the employee be with the firm for at least 3 years before vesting can begin.&nbsp; Make sure you check with your HR resources to understand your entitlement.<o:p></o:p></span></p><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">If for some reason, you leave your employer before full vesting takes place, you will forfeit the unvested portion of your ESOP account.<o:p></o:p></span></p><h2 style=\"margin: 0in 0in 0pt; line-height: 15pt\"><span style=\"font-family: Arial\"><font size=\"4\">What happens to my ESOP in the Unfortunate case of my Death?<o:p></o:p></font></span></h2><p style=\"line-height: 15pt\"><span style=\"font-size: 10.5pt; color: #111111; font-family: Arial\">In the case of an untimely death, the ESOP balance becomes 100% vested and withdrawal is allowed by the designated beneficiary that you set on the account.<o:p></o:p></span></p>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:5cc5ac42e7c1100fb17bb12e422c939b' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide to navigating through the markets.</p><p>Tim is in the Timers Digest Top 10 Rankings for his newsletter and is the Author of \"The Secret Science of Price and Volume”. Ord also contributes to the Stocks &amp; Commodities Magazine.</p>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for every symbol on the Nasdaq, NYSE, and AMEX.</p><p>Use the fast forward and pause features to analyze your trading decisions with more precision.</p>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:4dd69529abed14a5c1c8f3ba7e22f8eb' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Videos</h2>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:151e49b034b3ac8a98c1331980da8b69' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2>Related Articles</h2>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:e6ff5fe7efa34d641d697991ec512c61' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<div class=\"left\">\n <p>copyright &copy; 2011 MYSMP.com. All rights reserved.</p>\n <a href=\"/\">Home</a> • <a href=\"/advertise\">Advertise</a> • <a href=\"/sitemap\">Sitemap</a> • <a href=\"/privacy-policy\">Privacy Policy</a>\n</div>\n\n<div class=\"right\">\n <p>Designed &amp; Developed by: bxCreative.com: <a target=\"_blank\" href=\"http://bxcreative.com\">Web design</a></p>\n</div>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '4:64dc950e564b7bb494892459d2858add' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<h2 class=\"pane-title\"><a href=\"/investment-articles\">Investment Articles</a></h2><h2 class=\"pane-title\"><a href=\"/premium-services\">Premium Services</a></h2> <h2 class=\"pane-title\"><a href=\"/free-offers\">Free Offers</a></h2> <h2 class=\"pane-title\"><a href=\"/video\">Videos</a></h2>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:ef414e50ef3bcd60831c79a8ccac7f37' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>16192 Coastal Highway<br />\nLewes, Delaware 19958</p>\n', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:7ab206dca588aa9858fab14b55f27503' in /var/www/html/mysmp/includes/cache.inc on line 109.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 26.
  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<a href=\"/\"><img src=\"/sites/all/themes/bx/images/logo.png\" /></a>', created = 1558819950, expire = 1558906350, headers = '', serialized = 0 WHERE cid = '1:fb9bc3d8197c3f70b5a896cc8bae29d6' in /var/www/html/mysmp/includes/cache.inc on line 109.

Employee Stock Ownership Plans

What is an Employee Stock Ownership Plan - ESOP ?

An employee stock ownership plan, or ESOP for short, is a stock bonus plan that invests corporate profits back into the stock of sponsoring employer by rewarding employees with company stock.  An ESOP is a qualified plan and therefore, provides special tax benefits to the sponsoring employer, plan participants, and even the shareholder who sold the shares which were made available to the ESOP.

ESOPs are defined contribution plans which consist of a stock bonus plan or a hybrid which has a combination of a stock bonus plan and a money purchase pension plan

Employee stock ownership plans keep the employees focused on bettering the company and thus, becomes a win-win proposition for all parties involved.  

What are the Contribution Limits in an ESOP?

The ESOP is similar to a profit sharing plan or a money purchase pension plan in that it caps the employee benefit out at the lesser of the following two; 25% of their annual salary or $45,000.

When can I Withdraw the Funds in my ESOP?

In most cases, employer ESOP contributions vest 100% after 5 years.  This would mean that the employee would be able to sell 20% of the contribution every year for 5 years.

Alternatively, vesting can occur based on the number of years of employment with that company.  Some companies will mandate that the employee be with the firm for at least 3 years before vesting can begin.  Make sure you check with your HR resources to understand your entitlement.

If for some reason, you leave your employer before full vesting takes place, you will forfeit the unvested portion of your ESOP account.

What happens to my ESOP in the Unfortunate case of my Death?

In the case of an untimely death, the ESOP balance becomes 100% vested and withdrawal is allowed by the designated beneficiary that you set on the account.

Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

Send this article to a friend.

Enter multiple addresses on separate lines or separate them with commas.