A Sub-chapter S corporation is a business entity that provides flow-through tax treatment to its shareholders. An employee stock ownership plan (“ESOP”) is a qualified defined contribution plan that provides a company’s workers with retirement savings through their investments in their employer’s stock, at no cost to the worker.
ESOPs are regulated by the Employee Retirement Income Security Act (“ERISA”) just like pension funds, 401(k) plans, and other qualified retirement plans. Congress authorized the S corporation ESOP structure to encourage and expand retirement savings by giving more than a million American workers in all 50 states the opportunity to have equity in the companies where they work.
As shown in the key facts and figures below, today S ESOPs continue to accomplish exactly what Congress intended them to do: create jobs, generate economic activity and promote retirement savings:
Millennial employees at ESOP companies, by a factor of 46% to 15% of their counterparts, have a current net worth of $50,000 or more (John Zogby, 2019)
91% of ESOP workers feel they can live comfortably in retirement compared to only 49% of non-ESOP retirees. (Zogby 2019)
Employment among S ESOPs in continual operation since 2002 has increased an impressive 37 percent. (2017 study x Matrix Global Advisors CEO Alex Brill)
As of 2013, there were almost 7,000 ESOPs across every major industry that employ more than 13 million workers. (Joint ESCA/NCEO study)
While overall U.S. private employment in 2008 fell by 2.8%, employment in surveyed S corporation ESOP companies rose by 2%. Meanwhile, 2008 wages per worker in surveyed S corporation ESOP companies rose by 6%, while overall U.S. earnings per worker grew only half that much. (Brill 2012)
Employee-owners are more financially secure and less worried about their economic positions than other American workers.Learn More
Employee-owners are more financially secure and less worried about their economic positions than other American workers.
S ESOP companies provide unmatched retirement savings and security to workers.Learn More
S ESOPs are a major force of economic growth and job security – even and especially in times of economic downturn.Learn More