ESOP advisor in St. Louis. Employee stock ownership plans (ESOPs) have become an increasingly popular retirement benefit for employees in various industries in St. Louis. They offer business owners an opportunity to move on from their company while significantly reducing taxes on the sale, and offer employees a qualified retirement plan that builds their investment in your company. However, designing, implementing, and maintaining an ESOP isn't something most St. Louis business owners can do by themselves. Correct Capital's experienced and savvy ESOP advisors help businesses of all sizes, in St. Louis and around the country, develop tailored retirement plans that benefit themselves, their employees, and their bottom line.
If you're looking for a trustworthy financial partner in St. Louis who shares your goals of setting your company and employees up for long-term success, call Correct Capital at 314-930-4015, contact us online, or schedule a consultation with one of our financial advisors today.
What Is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a qualified retirement plan where employees receive shares of the company they work for, rather than savings or investments in other companies such as in a 401(k). ESOPs are 100% company funded, and often times shares offered to employees are not decision-making shares, meaning control of the company stays with ownership and other executives. They offer great incentives to employees while providing businesses with a better value proposition to employees, and allow business owners to set up a succession plan while maintaining control. Upon reaching retirement, most employees sell the stock at market value.
Perhaps most importantly, by selling part of your ownership to the ESOP, owners can defer capital gains taxes, allowing you to spread out that tax hit instead of having to pay taxes immediately. In many cases, ESOPs are a succession plan that keeps the most amount of money possible in your pocket.
Benefits of an Employee Stock Ownership Plan
- Sell a portion of your business (minimum 30%) with deferment of capital gains taxes (provided you reinvest into qualified replacement securities)
- Additional tax deductions through contributions made to employees
- If the business is one day 100% owned as an S-Corp by the ESOP, it's exempt from federal income taxes
- Align the goals of employees and stockholders
- Offer a higher value proposition when hiring
- Improve employee motivation and productivity
- Enhance employee retention and loyalty
- Facilitate succession planning and business continuity
- Maintain control while planning or easing into retirement
- Increase personal liquidity of owners, but still retain control of company
- Preserve your business' legacy and culture
What About KSOPs?
A KSOP is a qualified plan that is a mix between an ESOP and a 401(k). Ownership shares are offered to employees as in an ESOP, employees can contribute their own money to purchase additional shares through payroll deductions, or the company can match employee contributions with stock rather than cash.
Setting up a stock ownership plan doesn't have to exclude your employees from more diverse investments. In fact, adding an ESOP or KSOP to a more traditional retirement plan allows you to get the benefits of both. The experienced St. Louis ESOP advisors and retirement consultants of Correct Capital can help you find the right plans for your business.
How Our St. Louis ESOP Advisors Can Help
Whether you're motivated by a succession plan, employee incentives, or any other of ESOPs' benefits, you'll need an experienced St. Louis ESOP advisory firm in your corner to get the most out of your plan. When you work with Correct Capital, we:
- Reduce your tax liability as much as possible — When you sell your ownership shares to an ESOP, you can reinvest the proceeds in other securities to defer capital gains taxes on the sales, allowing you to keep more of the sales proceeds for other purposes. To defer capital gains taxes, your ESOP advisor can help you perform a Section 1042 exchange by selling at least 30% of your company to the ESOP and reinvesting the proceeds in qualified replacement securities or QRP. Taxes would be owed until the taxpayer has a disposition of the QRP. An ESOP advisor can ensure you get the most tax benefit from your ESOP.
- Customize your ESOP and retirement plans — Along with your team, we'll design and implement an ESOP that works best for you and your unique company. We like to challenge ourselves and our clients to get creative with retirement plan offerings to maximize the benefits they offer. We'll evaluate your needs, assess various ESOP options, and propose a customized ESOP that meets legal requirements and is aimed at maximizing benefits. If it makes sense, we may also recommend combining an ESOP with a 401(k) or other retirement plans to further increase benefits, yet retain efficiencies.
- Conduct a ESOP feasibility study — When we first meet with our clients, we work to understand their needs and collaborate with them to find the best qualified retirement plans for their business. For clients interested in an ESOP, part of that means conducting a feasibility analysis to determine if it's a viable option for your company. We'll look at:
- Cash flow, debts, and overall financial health
- Ownership structure to understand the implications of introducing an ESOP
- Employee demographics to understand how they're best served
- Tax implications for both your company and shareholders
- Company culture and employee engagement to see if an ESOP is likely to be well-received and supported
What if your business isn't a great fit for an ESOP? We'll work with you to find a retirement or succession plan that works for you.
- Connect you with valuation firms and trustees — Implementing and maintaining an ESOP involves a lot of moving parts, including accountants, attorneys, and a trustee to buy stock of the company on behalf of the ESOP. An experienced ESOP advisor with a strong network in St. Louis can help you set up your ESOP team with trusted partners.
- Ensure compliance — IRS, Department of Labor, and ERISA all have strict requirements for the management of retirement plans. For example when ESOP participants at a closely held employer receive company stock in an ESOP distribution, they have the right to require the employer to repurchase them at fair market value.
- ESOP sustainability assessments — In an ESOP, shares are granted to employees over time based on seniority years of service. Most of the time, that means that ownership of the company is passed to the ESOP in phases. Depending on how you structure your company and the plan, your ESOP may start with 30% ownership, but could ultimately achieve 100% ownership. As the plan evolves and matures, so will its impact on your company. ESOP advisors can plan for these changes and react to them in real time, allowing your plan to stay feasible, compliant, and beneficial.
- Employee communication and education — Our ESOP advisors offer group sessions and one-on-one meetings with your employees so they can get the most from your retirement plan. With an ESOP advisor from Correct Capital, your employees won't just get partial ownership of your company, but they'll feel like they're gaining ownership of their financial health and future.
Why Choose Correct Capital as Your ESOP Advisor in St. Louis
Correct Capital is an independent advisory firm that specializes in helping business owners set up retirement plans and succession plans for their companies. There are several factors we believe set us apart from other financial advisory firms in St. Louis and across the nation:
- A member of the National Association of Plan Advisors (NAPA), Correct Capital was recently named one of their Top Defined Contribution (DC) Teams with Assets under Advisement of at least $100 million. Correct Capital is the only advisory firm in Missouri to achieve this distinction.
- We're experienced in retirement plans and ESOPs. Correct Capital's clients currently operate these plans in a variety of industries, including for construction companies and contractors. As we work with both businesses and individuals and families to help set up retirement plans, we're ideally suited to understand the needs of each and create a plan that meets the needs of both, as well as those of your stockholders.
- Our award-winning St. Louis financial advisory team is made up of a diverse range of financial expertise, including an Accredited Investment Fiduciary®, multiple CERTIFIED FINANCIAL PLANNER™ professionals, a certified public accountant, and a six-time Barron's Top 1200 Advisor. With over 80 years of combined experience, we pool our collective talents and insights to best serve each client individually.
- As independent fiduciary advisors, we are legally and ethically bound to do what's in the best interest of you, your employees, and your company. We strive to form long-term relationships with our clients based on trust and the common goal of growing your and your employees' wealth.
Call Correct Capital to Speak With an ESOP Advisor in St. Louis Today
If you're interested in learning more about ESOPs or want to start the process of setting one up for your St. Louis business, speak to a Correct Capital ESOP advisor today. Let us do what we do best so you can focus on what you care about most: setting yourself, your business, and your employees up for success. Get in touch with one of our St. Louis ESOP advisors today at 314-930-4015 or contact us online.