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Learn More about the Tax Benefits of ESOPs

August 29, 2023 (3 min read)

Employee stock ownership plans (ESOPs) can be a wonderful tool.  They allow employees to share in the employer’s stock growth, put employer stock in (presumably) friendly hands, permit tax-advantaged payback of an ESOP loan and ESOP distributions, and allow dividends on the ESOP stock to help pay back that loan and increase allocations to participant accounts, on a tax-advantaged basis.  Learn more!

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  • Employee Stock Ownership Plans: Fundamentals
    Learn the benefits of ESOPs, especially how to make dividend payments tax-deductible. The plan document can accomplish this by being written to (1) pay the dividend directly to the participants in cash; (2) pay the dividend to the ESOP and then distribute it to participants, in cash within 90 days of the year-end; (3) at the election of the participant, pay to participants in either of the two methods above or pay to the plan to be reinvested in qualified employer securities; or (4) apply the dividend to make payments on an exempt ESOP loan. 

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