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.
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Steve Savant is the host of the daily producer show, Let’s Get Down to Business, and the weekly consumer show, Steve Savant’s Money, the Name of the Game. Steve is the number one online author and videographer of insurance content. During his 30-year career in the financial services industry,... More