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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 Maine, 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, including eligibility, vesting, distribution, fiduciary responsibilities, and the tax treatment of ESOP contributions. Maine does not have specific statutes that regulate ESOPs beyond what is mandated by federal law. Therefore, businesses in Maine that wish to establish an ESOP must comply with the federal guidelines. It's important for employers to differentiate ESOPs from employee stock option plans, which are not retirement plans but rather compensation programs that give employees the right to purchase company stock at a future date at a predetermined price.

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ESOPs

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