The recently passed federal legislation widely known as The SECURE 2.0 Act of 2022 brings a raft of helpful changes for retirement savers. But some of the least well-known provisions apply to a business succession opportunity that itself is often overlooked. For many business owners looking ahead to their exit from the company, an employee stock ownership plan (ESOP) has many unique benefits.
“In its simplest terms, an ESOP involves the sale of some or all of a business to its employees,” explains Brian Roth, Regional Advisor, ESOP Solutions Advisory at Bank of America. All of the company’s workers, if they meet certain requirements, must be covered by the plan, through which they accumulate shares of company stock in their retirement accounts. When they retire or leave the company, the business buys back the shares, helping fund their retirement.