Business / Tax

Employee Stock Ownership Plans

Issue
Although firms have offered company stock as a retirement benefit since the 19th century, the term employee stock ownership plan (ESOP) was first defined in federal law as part of the Employee Retirement Income Security Act of 1974 (ERISA). Since that time, thousands of companies employing over 10 million workers have created ESOPs as a way to promote employee ownership and provide retirement benefits. ESOPs can be established by C corporations and S corporations.

Over the years, Congress has acted to strengthen ESOPs, but at times the value of ESOPs has also been questioned when they have been erroneously connected to the financial problems of particular companies. ACEC believes that more can be done to protect ESOPs and improve the retirement security they provide to employees. ACEC supports measures to broaden employee ownership, lower the tax burden on ESOP stock, and provide technical assistance to companies seeking to form ESOPs.

ACEC Position
ACEC supports the Employee Stock Ownership Plan Promotion and Improvement Act of 2009 (S. 1612), introduced by Senator Blanche Lincoln (D-AR), which would improve federal law governing ESOPs. ACEC also supports the S Corporation ESOP Promotion and Expansion Act of 2009 (H.R. 3586), introduced by Congressman Ron Kind (D-WI), which would foster increased employee ownership of S corporations.