In my previous blog post regarding Net Unrealized Appreciation (NUA) tax benefits for ESOP participants, I mentioned the cost basis of stock distributions is taxed at the individual’s ordinary income tax rate.  In order to accurately determine the NUA on a stock distribution, the cost basis has to be tracked as part of the plan administration process.

Chapter 1 of the 2012 Republican Platform - We Believe in America, Restoring the American Dream:Rebuilding the Economy and Creating Jobs, specifically incorporates employee stock ownership plans (ESOPs) into their plank entitled A Twenty-First Century Workforce:

Since IRC Section 4975(e)(7) requires ESOPs be primarily invested in employer securities and participants may be entitled to stock distributions, electing Net Unrealized Appreciation (NUA) on a stock distribution should be considered before taking a distribution from the plan.

This blog lists common terms found in the lifecycle of an ESOP.  For more information on an particular term, click on the item below.

Retaining a valuable employee is one of the bigger challenges a small business owner will have to find a solution to in order to achieve long-term success. Much is invested in both time and money to recruit and train good employees. So what exactly does it take to attract and retain a good employee today?  

The August 15, 2012 Employee Ownership Update discusses a NCEO review of DOL filings that found that ESOP transactions, both in quantity and value, significantly dropped after 2008:

When a business is sold to a third party, the buyer generally prefers to purchase a company’s assets rather than its stock, whereas the seller would rather sell the stock.  As a result, the decision of asset sale or stock sale is often subject to the negotiation process.  A very powerful benefit of Selling to an ESOP is that an ESOP transaction is always a stock sale. 

To complete my blog series on ESOP distributions, today I’d like to discuss the methods of distributions available to ESOPs. For information on Timing of ESOP Distributions and Forms of ESOP Distributions, please visit my previous blog posts.