An ESOP is a type of defined contribution plan designed to allow employees to participate in the ownership of their company through a trust. ESOPs date back to 1974, when Congress passed legislation designed to encourage and facilitate the formation of these plans. Since then, many powerful tax incentives have been put in place to encourage the formation of ESOPs, making them a very attractive ownership structure for companies looking to:
- Motivate and reward their employees
- Increase productivity and retention
- Retain local jobs
- Help employees build meaningful retirement accounts
- Create a sustainable ownership model.