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What
is an ESOP?
An ESOP
is a Qualified Plan under the Employees Retirement
Income Security Act of 1974 (ERISA).
See sections 401(a), 4975(e)(7) and 501(a) of the
Internal Revenue Code of 1986, as amended, and Section
407(d)(6) of ERISA, 1974.
What you can do with this powerful tool of
personal and corporate finance is nothing short of
amazing.
An
ESOP is a defined contribution, tax-qualified plan that
has two distinguishing features:
(1) An ESOP is allowed to invest exclusively in
the stock of its sponsoring company; and (2) an ESOP can
borrow money. A
sponsoring corporation can contribute cash or stock to
an ESOP on a tax-deductible basis, increasing cash flow.
Owners of privately held corporations can sell
all or part of their stock to an ESOP for full Fair
Market Value, often completely avoiding capital gains
tax on the transaction.
Why
Consider an ESOP? Four
Powerful Uses
DID YOU
KNOW you can sell your company stock to an ESOP and pay
NO TAX on the transaction?
That’s right! An ESOP provides the only way, under the U.S. Tax Code, to
sell highly appreciated company stock and totally avoid
capital gains tax on the transaction.
This
is the ultimate exit strategy!!
DID
YOU KNOW you can actually purchase capital goods with
pre-tax dollars, if structured through an ESOP?
Think of the competitive advantage!
DID
YOU KNOW you can purchase another company with pre-tax
dollars, if structured through an ESOP?
That means you’ll be paying on 66-cent-dollars
for the purchase of the company. Compare that to the normal after-tax cost of approximately
$1.52!
DID
YOU KNOW you can refinance existing debt through an ESOP
and fully tax-deduct Principal and interest on the
repayment of the debt?
Sound too good to be true?
But it is true!
That’s the power of an ESOP.
UBA Provides Unparalleled Service and Expertise
- ESOP design and implementation.
- Strategic planning.
- Qualified valuations of ESOP companies.
- Financial consulting.
- ESOP financing and negotiations.
- Lender education
- Project management of entire process.
- All team members required to implement a successful
ESOP.
- Technical strategies to accomplish stated goals.
- Repurchase liability studies.
- Employee education on ongoing basis.
- Ongoing support (the most important of our services).
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