In our 2012 Update on ESOPs and Corporate Tax Reform we explored the upcoming corporate tax reform debate and its potential impact on ESOPs.  An Analysis of the Benefits S ESOPs Provide the U.S. Economy and Workforce, a study released by a former advisor to the Simpson-Bowles bipartisan deficit reduction commission, examines the economic impact of employee stock ownership plans (ESOPs) and finds that S ESOPs positively contribute to job creation by promoting employee commitment:

Earlier this week we discussed the introduction of Pro-ESOP Legislation being introduced by Sen. Bernard Sanders [I-VT] this week. S. 3421: WORK Act was introduced on July 23, 2012, by Sen. Bernard Sanders [I-VT] and co-sponsored by Sen. Daniel Akaka [D-HI], Sen. Richard Blumenthal [D-CT], Sen. Sherrod Brown [D-OH], and Sen. Patrick Leahy [D-VT].  It has been referred to the Senate Committee on Health, Education, Labor, and Pensions , and the committee chair, Sen. Thomas “Tom” Harkin [D-IA], will determine whether the bill will move past the committee stage.  As we mentioned earlier this week, this bill is a reintroduction of S. 2909 from the previous session of Congress.  Here is the text of the legislation: 

Earlier this week we discussed the introduction of Pro-ESOP Legislation being introduced by Sen. Bernard Sanders [I-VT] this week.   S. 3419: United States Employee Ownership Bank Act was introduced on July 23, 2012, by Sen. Bernard Sanders [I-VT] and co-sponsored by Sen. Daniel Akaka [D-HI], Sen. Richard Blumenthal [D-CT], Sen. Sherrod Brown [D-OH], and Sen. Patrick Leahy [D-VT].  It has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, and the committee chair, Sen. Tim Johnson [D-SD], will determine whether the bill will move past the committee stage.  As we mentioned earlier this week, this bill is a reintroduction of S. 2914 from the previous session of Congress.  Here is the text of the legislation: 

[UPDATE:  More information about S. 3421: WORK Act and S. 3419: United States Employee Ownership Bank Act is now available.]

We have been exploring the many benefits of Selling to an ESOP, including how Selling to an ESOP Pays for Itself, Selling to an ESOP in 2012 Increases After-Tax Proceeds by 43%, and Selling to an ESOP Enables a Business Owner to Sell In 60-90 Days.

ESOPs have their own special set of rules regarding the timing of distributions to terminated participants with vested account balances.  IRC Section 409(o)(1)(A) instructs the distribution of the participant’s account balance in the plan will commence not later than 1 year after the close of the plan year—

We have previously discussed how Selling to an ESOP provides a Built-In Buyer that can purchase the company in as little as 60-90 Days.  Another benefit is that the seller is allowed to sell to an ESOP for full fair market value of the company (but not more than fair market value) as determined by an independent appraiser.  The protection provided by the Internal Revenue Code to engage an independent appraiser protects the ESOP participants and ensures that the full fair market value of the company is used in the determination of the sale price.

A recent article from the Human Capital Institute (HCI), "Want Trust? Be a Leader" says, “to be trusted is a greater compliment than to be loved”. 

The Pension Protection Act Blog has a great article reviewing the latest on Using a 401(k) Rollover to Buy a Business, also known as Rollovers as Business Startups (ROBS).  It shares a 2008 IRS memo providing the guidelines regarding rollovers as business start-ups and discusses the findings of the IRS’s ROBS Project: