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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 Oklahoma, 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. The main purpose of an ESOP is to enable employees to share in the ownership and potentially the profits of the company they work for. Unlike stock option plans, ESOPs provide employees with stock ownership outright, not just the option to buy stock at a future date. It's important for employers in Oklahoma to comply with federal regulations when setting up and maintaining an ESOP to ensure the tax benefits associated with these plans and to avoid penalties.

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