ESOP advisor in Edwardsville, IL. Employee stock ownership plans (ESOPs) are becoming a more and more popular retirement benefit for employees in a variety of sectors in Edwardsville, IL. They offer business owners a chance to move on from their company while significantly reducing taxes on the sale, and offer employees a tax-advantaged retirement plan that builds their productivity and motivation. However, designing, implementing, and maintaining an ESOP isn't something most Edwardsville, IL business owners can do alone. Correct Capital's seasoned and savvy ESOP advisors help businesses of all sizes, in Edwardsville, IL and around the country, design tailored retirement plans that benefit themselves, their employees, and their bottom line.
If you're seeking a trustworthy financial partner in Edwardsville, IL who shares your goals of building your company and employees for enduring success, call Correct Capital at 877-930-4015, contact us online, or schedule an appointment with one of our financial advisors today.
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What Is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a tax-advantaged retirement plan where employees receive shares of the company they work for, rather than savings accounts 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 the C-suite. They offer superb 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 retaining control. When they retire, most employees sell the stock at market value value.
Perhaps even more importantly, by selling part of your ownership to the ESOP, owners can defer capital gains taxes, allowing you to disperse that tax hit instead of needing to pay taxes right away. In many cases, ESOPs are a transition plan that keeps the most amount of money achievable with the owner.
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)
- Further 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
- Present a higher value proposition when hiring
- Boost employee motivation and productivity
- Improve employee retention and loyalty
- Facilitate succession planning and business continuity
- Keep control while preparing or easing into retirement
- Raise personal liquidity of owners, but still retain control of the company
- Carry on 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 given to employees as in an ESOP, employees can deposit their own money to purchase additional stock through payroll deductions, or the company can match employee contributions with shares instead of cash.
Setting up a stock ownership plan doesn't have to exclude your employees from more diverse investments. In fact, including an ESOP or KSOP to a more traditional retirement plan allows you to attain the benefits of both. The experienced Edwardsville, IL ESOP advisors and retirement consultants of Correct Capital can assist you find the right plans for your business.
How Our Edwardsville, IL ESOP Advisors Can Help
Whether you're moving on from control of your company or are interested in an ESOP's other benefits, you'll need an experienced Edwardsville, IL ESOP advisory firm in your corner to reap the most benefits of your plan. When you work with Correct Capital, we:
- Reduce your tax liability as much as possible — When you transfer your ownership shares to an ESOP, you can reinvest the proceeds in alternative securities to postpone capital gains taxes on the sales, allowing you to retain more of the profit. To postpone capital gains taxes, your ESOP advisor can help you carry out 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 payable until the taxpayer has a sale of the QRP. An ESOP advisor can assure you get the most tax benefit from your ESOP.
- Customize your ESOP and retirement plans — Along with your team, we'll design and execute an ESOP that works best for you and your distinctive company. We like to challenge ourselves and our clients to get innovative with retirement plan offerings to enhance the benefits they offer. We'll evaluate your needs, evaluate several ESOP options, and recommend a personalized ESOP that meets legal requirements and is aimed at optimizing benefits. If it makes sense, we may also suggest combining an ESOP with a 401(k) or different 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 work together with them to discover the optimal tax-advantaged retirement plans for their business. For clients interested in an ESOP, part of that means conducting a feasibility analysis to ascertain if it's a viable option for your company. We'll look at:
- Cash flow, debts, and overall financial health
- Ownership structure to understand how it'll be affected by introducing an ESOP
- Employee demographics to understand what they need from their retirement plan
- Tax implications for both your company and shareholders
- Company culture and employee engagement to determine 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 CPAs, attorneys, and a trustee to purchase stock of the company on behalf of the ESOP. An experienced ESOP advisor with a strong network in Edwardsville, IL can help you establish your ESOP team with dependable partners.
- Ensure compliance — IRS, Department of Labor, and ERISA all have strict requirements for the management of retirement plans. 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 option to ask for the employer to repurchase 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 sold to the ESOP in increments. 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 evolves and matures, so will its impact on your company. ESOP advisors can plan for these changes and respond to them in real time, facilitating your plan to stay feasible, compliant, and advantageous.
- Employee communication and education — Our ESOP advisors offer group meetings and individual consultations 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 acquire a portion of your company, but they'll feel like they're obtaining ownership of their financial stability and eventual retirement.
Why Choose Correct Capital as Your ESOP Advisor in Edwardsville, IL
Correct Capital is an independent advisory firm that specializes in assisting business owners establish retirement plans and succession plans for their companies. There are multiple factors we point to that distinguish us from other financial consulting companies in Edwardsville, IL, and across the country:
- We're experienced in retirement plans and ESOPs. Correct Capital's clients currently operate these plans in a range of industries, 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 well-prepared to understand the needs of each and establish a plan that fulfills the needs of both, as well as those of your stockholders.
- As independent fiduciary advisors, we are legally and ethically bound to do what's in the optimal interest of you, your employees, and your company. We aim to establish long-term relationships with our clients grounded in trust and the shared goal of increasing your and your employees' wealth.
Other services we offer in Edwardsville, IL:
Call Correct Capital to Speak With an ESOP Advisor in Edwardsville, IL Today
If you're interested in learning more about ESOPs or wish to start the process of setting one up for your Edwardsville, IL business, reach out to a Correct Capital ESOP advisor today. Let us do what we do best so you can prioritize on what you care about most: establishing yourself, your business, and your employees up for achievement. Reach out with one of our Edwardsville, IL ESOP advisors immediately at 877-930-4015 or contact us online.
