S Corporation ESOP Traps for the Unwary

by Paul Horn, Corey Rosen, Nancy Dittmer

Overview

An employee stock ownership plan (ESOP) is a powerful tool that can greatly benefit both employees and their employer. When an ESOP owns an S corporation, it is partially or wholly exempt from federal income taxation (and possibly state taxation, depending on the state), making it an even more powerful tool in many cases. There are clearly many benefits, financial and otherwise, associated with the S corporation ESOP model. However, since there is rarely a free lunch in the tax law, there are also various traps for the unwary in administering an S corporation ESOP. This publication, written by leading experts, describes some of these potential minefields and provides possible solutions to keep your ESOP and your company out of harm's way.

Product Details

BN ID:	2940014757058
Publisher:	National Center for Employee Ownership
Publication date:	11/30/2011
Sold by:	Barnes & Noble
Format:	eBook
Pages:	24
Sales rank:	337,617
File size:	44 KB

About the Author

Paul Horn is the owner of WorkPlace Consultants, LLC, where he consults on ESOPs and other benefit-related issues. Beginning his career as an attorney with the IRS Office of Chief Counsel, Paul litigated retirement plan cases before the Tax Court, worked on tax rulings, and coordinated IRS positions with other government agencies. He then worked at major law firms in San Francisco and Washington, D.C., and returned to government service as FDIC benefits counsel. He then joined American Systems, where he had responsibility for all benefit and compensation programs and helped the company become one of the largest 100% ESOP-owned S corporations.

Corey Rosen is the NCEO’s former executive director and senior staff member. He cofounded the NCEO in 1981 after working for five years as a professional staff member in the U.S. Senate, where he helped draft legislation on employee ownership plans. Before that, he taught political science at Ripon College. He is the author or coauthor of over 100 articles and many books on employee ownership, and a coauthor (with John Case and Martin Staubus) of Equity: Why Employee Ownership Is Good for Business (Harvard Business School Press, 2005).

Nancy Dittmer is a managing director with Verisight, Inc. Nancy has nearly 25 years' experience in the employee benefits field. As the leader of the firm’s national ESOP administration and consulting practice, Nancy is responsible for all of the ESOP services that are offered to its clients. These include ESOP feasibility studies, repurchase obligation forecasting, annual participant accounting and reporting, consultation on issues impacting mature ESOPs and Code Section 409(p) testing.