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 Missouri, 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 of 1974 (ERISA) and the Internal Revenue Code. These laws set forth the rules for ESOP creation, operation, and funding. They require that ESOPs operate for the exclusive benefit of employees and their beneficiaries, and they establish standards of conduct for plan fiduciaries. Missouri does not have specific statutes governing ESOPs, as the federal regulations preempt state law in this area. It's important for employers in Missouri considering an ESOP to comply with federal guidelines, which include nondiscrimination in participation, vesting requirements, and limits on contributions and benefits. Additionally, ESOPs must be managed by a trustee and have a valuation performed regularly to determine the stock price for transactions. Employers may receive tax benefits for contributions to an ESOP, and employees benefit from the potential growth of the company stock held in their retirement accounts.