Blue Ridge ESOP Associates Industry News

What is an ESOP? Know a company owner looking for an exit strategy as they face retirement age? What kind of business is right for an ESOP? How does an employee benefit from an ESOP? These questions and many others are answered in Tom Roback's interview which is now available to listen to online. 

Tom Roback's interview about ESOPs. Listen here.

January brings another batch of resolutions. Most, alas, will be long forgotten by the end of first quarter. Because you want to make more of your investment in ESOP ownership and engage your employees as owners, why not resolve to use the SMART process to achieve your ownership-development goals in 2016?

SMART, as you may know, stands for Specific, Measurable, Attainable, Relevant and Time-bound. Here’s how you can be SMARTer and make more of employee ownership this year.

S= Specific. What do you want to accomplish with your ESOP? What level of understanding and engagement do you want from employees? What attitudes, behaviors and actions would you like employee-owners to display in their daily jobs? Write down specifics that you want to see happen.

If you are wondering if your plan can be creative with compensation used to allocate employer contributions, then you need to be aware of the ramifications of such changes.

Keeping your ESOP timeline current

“Deadlines spur action” is a common refrain of Andrew Brandt’s, one of my favorite Twitter commentators. Andrew is a former front office executive with the Green Bay Packers and current Professor at the Wharton School of Business. He uses this statement frequently when commenting on NFL players and teams that complete deals or contract negotiations at or near deadlines on the NFL schedule. This statement applies in many areas of life including what we will discuss in this article: ESOP plan administration timelines.

ESOP timelines can be an effective tool if certain conditions are met. The objective is to make them manageable and a mechanism that increases efficiency and awareness for all of the parties involved in the process.

Here are three thoughts to keep in mind so that an ESOP timeline is not just another task you complete and forget about but instead becomes an invaluable roadmap to successful ESOP plan administration.

This past June, the IRS released Technical Advice Memorandum (TAM) 201425019, which addressed the tax consequences of an ESOP failing to use the proper method of calculating the annual release of company stock from the loan suspense account.

Employee Stock Ownership Plans (ESOPs) seem to be generating more interest from business owners lately. While ESOPs have similarities to 401(k) plans, there are big differences. ESOPs have the unique right to borrow and own up to 100% of the company's common stock. ESOP assets are held in a tax-exempt trust and employees do not contribute anything personally.