Premier Pension Solutions

Employee stock ownership plans (commonly referred to as ESOPs) are a form of qualified retirement plan that invest primarily in the stock of the sponsoring employer. ESOPs are subject to the qualification rules of Section 401(a) of the Internal Revenue Code and the rules contained in the Employee Retirement Income Security Act of 1974 ("ERISA"), as they relate to eligibility, prohibitions on discrimination, vesting and fiduciary responsibility. Moreover, ESOPs are subject to a number of additional rules that are generally not applicable to other forms of qualified retirement plans, especially when the ESOP holds the stock of a non-publicly traded company. Such rules include the requirements that all purchases of non-publicly traded stock be at fair market value supported by a qualified independent appraiser, that voting rights on significant corporate matters be passed-through to the ESOP participants and that ESOP participants have both the right to require the investment diversification of their plan accounts upon attaining age 55 and the right to "put" the employer stock received upon a distribution of benefits back to the employer at current fair market value (thereby creating a repurchase liability). However, ESOPs are also subject to a significant exception from ERISA`s prohibited transaction rules that allows ESOPs to engage in a variety of financial transactions with both the sponsoring employer, its affiliate and the shareholders of the sponsoring employer.

Accordingly, ESOPs can be utilized to achieve a variety of corporate and shareholder objectives while, at the same time, providing a potentially valuable employee benefit to the ESOP`s participants.
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801 Washington Avenue  •   Suite 302  •  Waco, Texas 76701   •   P.O. Box 7247  •  Waco, Texas 76714
9385 Miller Lane  •  San Antonio, Tx. 78266