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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 Indiana, as in other states, an Employee Stock Ownership Plan (ESOP) is a type of employee benefit 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 an ESOP, which include the creation of a trust to hold the company's stock, rules for allocating stock to employees' accounts, and the vesting schedules for those allocations. The ESOP is intended to provide retirement benefits to employees and also serves as a corporate finance strategy and an employee ownership vehicle. Indiana does not have specific statutes governing ESOPs, as the primary regulation of these plans is at the federal level. However, Indiana businesses establishing an ESOP must comply with federal guidelines and may also be subject to state laws concerning corporations, securities, and taxation that indirectly affect the operation of an ESOP.

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