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July provides custom plan design to meet your goals. Click below to let us design a plan for you.
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Employee Stock Ownership Plans
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Employee Stock Ownership Plans (ESOPs) are retirement plans similar to profit sharing plans. Unlike Profit Sharing Plans, however, they allow employers to share or transfer company ownership to employees. ESOPs can be a great employee benefit and can help to promote an ownership culture among employees.
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How ESOPs Work
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Discretionary contributions. 401(k) plans are a disciplined and convenient way to help employees save, allowing them to plan for a secure retirement.
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Shares of stock allocated to employees. 401(k) plans have become one of the most popular employee benefits offered by companies today. Because of this it has become a very important tool in helping to recruit and retain employees.
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| Employees share in company growth. 401(k) plans offer tremendous tax savings to both employers and employees. Employers receive tax deductions for making contributions, and employee salary deferrals are made before federal income taxes are withheld. All contributions grow on a tax-deferred basis. |
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Vesting. ESOP contributions can be subject to a vesting schedule requiring employees to work up to 5 years before becoming fully vested.
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Distributions. Upon an employee's termination or retirement, company stock is generally repurchased by the ESOP at fair market value and a cash disbursement is made to the participant.
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Leveraged ESOPs
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ESOP loan. Unlike traditional profit sharing plans, an ESOP is allowed to borrow money to purchase shares of stock. The loan can be structured in a number of ways, but it is generally secured by the company or majority shareholders.
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| Loan repayments.
Employers make tax deductible contributions to the ESOP to repay the loan. Both principal and interest are tax deductible.
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ESOP Uses
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| Purchase shares of departing owner. Owners of closely-held businesses can use an ESOP to create a market for their shares. This can be done through cash contributions from the company or by having the ESOP borrow money to purchase shares. |
| Borrow money at low after-tax cost. An ESOP borrows funds and receives tax deductions for the loan repayments and interest making the after-tax cost lower than traditional loans. |
| Great employee benefit. ESOPs can be a great employee benefit and can help to align employers' and employee's interests. |
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PAYROLL SERVICES
July offers complete payroll outsourcing, including direct deposit, complete tax management services, and full integration with your retirement plan. A single provider for retirement and payroll services reduces your work load and increases satisfaction.
RESOURCE CENTER
The plan resource center provides helpful access to important
information including plan limits, plan features, terminology, and tips to avoid mistakes.
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