ESOP advisor in Columbia, IL. Employee stock ownership plans (ESOPs) have become an increasingly popular retirement plan for employees in a variety of sectors in Columbia, IL. They offer business owners an opportunity to move on from their company while greatly reducing taxes on the sale, and offer employees a tax-advantaged retirement plan that increases their productivity and motivation. However, designing, implementing, and maintaining an ESOP isn't something most Columbia, IL business owners can do alone. Correct Capital's experienced and savvy ESOP advisors help businesses of all sizes, in Columbia, IL and around the nation, create tailored retirement plans that benefit themselves, their employees, and their profit.
If you're in search of a trustworthy financial partner in Columbia, IL who shares your goals of building your company and employees for enduring success, call Correct Capital at 314-930-4015, contact us online, or schedule a consultation with one of our financial advisors right away.
What Is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a qualified retirement plan where employees receive stock of the company that employs them, rather than savings accounts or investments in other companies as in a typical retirement plan. ESOPs are 100% company funded, and often times shares offered to employees are not decision-making shares, meaning control of the company stays with the C-suite. They offer excellent incentives to employees while providing businesses with a superior value proposition in the hiring process, and allow business owners to set up a succession plan while maintaining control. Upon reaching retirement, most employees sell the stock at marketplace value.
Of special interest to business owners, by selling part of your ownership to the ESOP, owners can defer capital gains taxes, allowing you to distribute the tax consequences of the sale instead of needing to pay taxes promptly. In many cases, ESOPs are a transition 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 not subject to 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
- Ease succession planning and business continuity
- Retain control while planning or easing into retirement
- Raise personal liquidity of owners, but still keep control of the company
- Carry on your business' legacy and culture
What About KSOPs?
A KSOP is a similar type of plan that is a mix between an ESOP and a 401(k). Ownership shares are extended to employees as in an ESOP, employees can contribute their own money to acquire additional stock through payroll deductions, or the company can match employee contributions with shares rather than cash.
Setting up a stock ownership plan doesn't have to exclude your employees from the risk tolerance that comes with diverse investments. In fact, introducing an ESOP or KSOP to a more traditional retirement plan allows you to attain the benefits of both. The experienced Columbia, IL ESOP advisors and retirement consultants of Correct Capital can help you find the right plans for your business.
What Our Columbia, IL ESOP Advisors Do for You
Whether you're moving on from ownership of your company or are interested in an ESOP's other benefits, you'll need an experienced Columbia, IL ESOP advisory firm by your side to get the most out of your plan. When you work with Correct Capital, we:
- Lower your tax liability as much as possible — When you sell your ownership shares to an ESOP, you can reinvest the proceeds in different securities to defer capital gains taxes on the sales, allowing you to keep more of the profit. To postpone capital gains taxes, your ESOP advisor can help you execute 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 guarantee you receive the most tax benefit from your ESOP.
- Customize your ESOP and retirement plans — Along with your team, we'll develop and execute an ESOP that works best for you and your unique company. We like to test ourselves and our clients to get innovative with retirement plan offerings to enhance the advantages they offer. We'll assess your needs, evaluate various ESOP options, and suggest a tailored ESOP that meets legal requirements and is aimed at optimizing benefits. If we believe it'll work, we may also suggest combining an ESOP with a 401(k) or different retirement plans to further boost benefits, without sacrificing efficiencies.
- Conduct a ESOP feasibility study — When we first meet with our clients, we work to understand their needs and collaborate with them to identify the optimal tax-advantaged retirement plans for their business. For clients looking at an ESOP, part of that means performing a feasibility analysis to ascertain if it's a workable option for your company. We'll examine:
- Cash flow, debts, and overall financial health
- Ownership structure to understand how it'll be affected by 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 collaborate 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, lawyers, and a trustee to purchase stock of the company on behalf of the ESOP. An experienced ESOP advisor with a strong network in Columbia, IL can help you arrange your ESOP team with dependable partners.
- Ensure compliance — IRS, Department of Labor, and ERISA all have strict guidelines for the administration of ESOPs. For instance, when individuals enrolled in an employee stock ownership plan at a closely held employer receive company stock in an ESOP distribution, they have the right to require the employer to buy back them at current market price.
- ESOP sustainability assessments — In an ESOP, shares are granted to employees over time based on how long they've worked there. Most of the time, that means 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%, but could ultimately achieve 100% ownership. As the plan develops and matures, so will its impact on your company. ESOP advisors can plan for these changes and adapt to them in real time, enabling 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 attain a portion of your company, but they'll feel like they're gaining ownership of their financial health and eventual retirement.
Why Choose Correct Capital as Your ESOP Advisor in Columbia, IL
Correct Capital is an independent advisory firm that specializes in helping business owners establish retirement plans and succession plans for their companies. There are numerous factors we point to that distinguish us from other financial advisory firms in Columbia, IL, and all over the country:
- 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 wide range of sectors, including for construction companies and contractors. As we work with both businesses and individuals and families to support in setting up retirement plans, we're ideally suited to understand the needs of each and develop a plan that meets the requirements of both, as well as those of your stockholders.
- Our award-winning Columbia, IL financial advisory team is composed of a wide 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 lawfully and ethically bound to do what's in the utmost benefit of you, your employees, and your company. We aim to forge long-term relationships with our clients founded on trust and the common goal of increasing your and your employees' wealth.
Other services we offer in Columbia, IL:
- Company 401(k) Plans
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Small Business Retirement Plans
- Tax Planning
- Social Security Consultants Near Me
- Retirement Calculator
- Retirement Planning
- Rollover 401(k)
Call Correct Capital to Speak With an ESOP Advisor in Columbia, IL Today
If you're interested in learning more about ESOPs or aspire to initiate the process of setting one up for your Columbia, IL business, contact a Correct Capital ESOP advisor at this moment. Let us do what we do best so you can focus on what you care about most: positioning yourself, your business, and your employees up for prosperity. Contact with one of our Columbia, IL ESOP advisors today at 314-930-4015 or contact us online.