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An employee stock ownership plan (ESOP) is a retirement plan in which an employer contributes its stock to the plan for the benefit of the company’s employees. This type of plan should not be confused with employee stock option plans, which give employees the right to buy their company’s stock at a set price after a certain period of time.

In Iowa, as in other states, an Employee Stock Ownership Plan (ESOP) is a type of retirement plan designed to invest primarily in the stock of the sponsoring employer. ESOPs are governed by federal law, specifically the Employee Retirement Income Security Act (ERISA) of 1974, and the Internal Revenue Code. These laws set forth the requirements for establishing, maintaining, and funding ESOPs, including rules on eligibility, vesting, distribution, and fiduciary responsibilities. The ESOP allows employees to become beneficial owners of the stock in their company without having to purchase the stock directly. Contributions to the ESOP are tax-deductible for the employer, and employees pay no tax on the contributions until they receive the stock when they leave or retire. It's important to distinguish ESOPs from employee stock option plans, which are incentive schemes that give employees the right to purchase company stock at a future date at a predetermined price, not a form of retirement plan.

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Investments

ESOPs

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