Employee stock ownership plan

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Related to Stock Purchase Plans: ESPP

Employee stock ownership plan (ESOP)

A company contributes to a trust fund that buys stock on behalf of employees.

Employee Stock Ownership Plan

An employee benefit in which employees are issued or sold shares in the publicly-traded company for which they work after a certain number of days of employment. ESOPs are designed to give employees equity in the company to boost morale and thereby improve productivity. ESOPs receive various tax benefits, and may give employees a greater say in the election of the board of directors.

Employee Stock Ownership Plan (ESOP)

A qualified retirement plan in which employees receive shares of the common stock of the company for which they work and the company receives an investment tax credit. The purpose of this type of plan is to give employees a vested interest in the company, thereby providing them with an additional incentive toward greater productivity. See also leveraged ESOP.

Employee stock ownership plan (ESOP).

An ESOP is a trust to which a company contributes shares of newly issued stock, shares the company has held in reserve, or the cash to buy shares on the open market.

The shares go into individual accounts set up for employees who meet the plan's eligibility requirements.

An ESOP may be part of a 401(k) plan or separate from it. If it's linked, an employer's matching contribution may be shares added to the ESOP account rather than cash added to an investment account.

If you're part of an ESOP and you leave your job, you have the right to sell your shares on the open market if your employer is a public company.

If it's a privately held company, you have the right to sell them back at fair market value. The vast majority of ESOPs are offered by privately held companies.

References in periodicals archive ?
Savings from an employee stock purchase plan can be applied to a variety of financial needs, such as a down payment for a home, a home improvement project, tuition payments or other life expenses.
The Knowledge Group/The Knowledge Congress Live Webcast Series, the leading producer of regulatory focused webcasts, has announced today that Kristin Taylor, Manager, Compensation & Benefits, BDO USA LLP, will speak at the Knowledge Congress' webcast entitled: "Understanding New Employer Reporting Requirements for Incentive Stock Option and Employee Stock Purchase Plan Live Webcast." This event is scheduled for August 2, 2011 from 3:00 - 5:00 PM ET.
For example, have stock purchase plans had a major impact on the distribution of stock ownership in this country?
Alison Wright is a partner in the San Francisco/Palo Alto office of Baker & McKenzie LLP where her practice focuses on the tax, securities and ERISA aspects of executive and equity compensation (including nonqualified deferred compensation plans, stock compensation plans and employee stock purchase plans) and of traditional employee benefit plans - including 401(k) and other retirement plans - health and welfare plans and cafeteria plans.
While the tax benefits associated with Incentive Stock Options (ISO) and Employee Stock Purchase Plan (ESPP) are limited to the United States, other taxing jurisdictions provide favorable tax consequences for certain stock option income -- most notably, the United Kingdom and France.
For example, if your client acquired stock by exercising stock options, or even employee stock purchase plans, it is possible that over a period of years, some of the stock will qualify and some will not.
Investing in stock through company-sponsored stock purchase plans is one viable way to practice the principle of dollar-cost averaging.
The net effect of this announcement would be to reverse a 30-year tax policy of not subjecting incentive stock options (ISOs) and employee stock purchase plans (ESPPs) to payroll tax withholdings.
Notice 2001-14 clarifies the issue of the assessment and collection of FICA, FUTA and income tax withholding on statutory stock options, which include both incentive stock options (ISOs) and employee stock purchase plans (ESPPs), covered under Secs.
The survey of 113 U.S.-based public technology companies found that 84 percent have employee stock purchase plans, versus 62 percent of companies in other industries.
83 (generally treating property received for services as income), and 421 through 424 (incentive stock options and employee stock purchase plans).