The ESOP is essentially a stock bonus plan in which employer stock may be used for contributions. The employer contributes company stock or cash to the plan, and the contributions are tax-deductible. Contributions are not taxed currently to the employee. Earnings accumulate income tax-deferred. Distributions are generally taxed as ordinary income. Distributions may be eligible for 10-year income averaging. Or, at retirement from the current employer, distributions may be rolled over to a traditional or a Roth IRA, or to another employer plan if that plan will accept such a rollover. Steve and Keriti lay out the essentials as they introduce ESOPs into your practice.
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions
Steve Savant hosts The Business Insurance Zone, a daily talk show for financial producers and One for the Money, a weekly talk show for consumers. Steve’s videos, tweets, blogs, articles and news commentary are distributed on VIMEO, You Tube, Face Book, Tweeter, LinkedIn, Google Plus, Pinterest... More