ESOP advisor in O'Fallon, IL. Employee stock ownership plans (ESOPs) have become an increasingly common retirement benefit for employees in various industries in O'Fallon, IL. They offer business owners an opportunity to exit their company while greatly reducing taxes on the sale, and offer employees a qualified retirement plan that increases their investment in your company. However, designing, implementing, and maintaining an ESOP isn't something most O'Fallon, IL business owners can do alone. Correct Capital's proficient and savvy ESOP advisors help businesses of all sizes, in O'Fallon, IL and around the nation, design tailored retirement plans that benefit themselves, their employees, and their revenue.
If you're in search of a trustworthy financial partner in O'Fallon, IL who shares your goals of building your company and employees for sustained success, call Correct Capital at 314-930-4015, contact us online, or schedule an appointment with one of our financial advisors today.
What Is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a tax-advantaged retirement plan where employees receive stock of the company that employs them, rather than savings funds 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 governing shares, meaning control of the company stays with the C-suite. They offer superb incentives to employees while providing businesses with a better value proposition in the hiring process, and allow business owners to set up a succession plan while preserving control. When they retire, most employees sell the stock at market value value.
Perhaps most importantly, by handing over 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 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)
- Extra tax deductions through contributions made to employees
- If the business is one day 100% owned as an S-Corp by the ESOP, it's free from federal income taxes
- Align the goals of employees and stockholders
- Provide a higher value proposition when hiring
- Boost employee motivation and productivity
- Improve employee retention and loyalty
- Ease succession planning and business continuity
- Maintain control while preparing or easing into retirement
- Raise personal liquidity of owners, but still hold on to 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 combination of an ESOP and a 401(k). Ownership shares are given to employees as in an ESOP, employees can deposit their own money to buy 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 more diverse investments. In fact, adding an ESOP or KSOP to a more traditional retirement plan allows you to attain the benefits of both. The experienced O'Fallon, IL ESOP advisors and retirement consultants of Correct Capital can aid you find the right plans for your business.
How Our O'Fallon, 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 a knowledgeable O'Fallon, 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 sell your ownership shares to an ESOP, you can reinvest the proceeds in alternative securities to defer capital gains taxes on the sales, allowing you to keep more of the sales proceeds for other purposes. To postpone 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 that money in qualified replacement securities or QRP. Taxes would be owed until the taxpayer has a sale of the QRP. An ESOP advisor can guarantee 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 suited specifically to you and your company. We like to challenge ourselves and our clients to get innovative with retirement plan offerings to optimize the benefits they provide. We'll examine your needs, assess various ESOP options, and propose a tailored 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 additionally 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 discover the best qualified retirement plans for their business. For clients interested in an ESOP, part of that means performing 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 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 assess 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 partner 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 acquire stock of the company on behalf of the ESOP. An experienced ESOP advisor with a strong network in O'Fallon, IL can help you arrange your ESOP team with reliable partners.
- Ensure compliance — IRS, Department of Labor, and ERISA all have strict regulations for the management of employee stock ownership plans. For example, 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 require the employer to repurchase them at market value.
- ESOP sustainability assessments — In an ESOP, shares are granted to employees over time based on how long they've worked there. Usually, that means ownership of the company is passed to the ESOP in stages. 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 implications for your company. ESOP advisors can plan for these changes and react to them in real time, enabling your plan to stay viable, compliant, and advantageous.
- Employee communication and education — Our ESOP advisors offer collective workshops and individual consultations with your employees so they can optimize the advantages 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 obtaining ownership of their financial health and eventual retirement.
Why Choose Correct Capital as Your ESOP Advisor in O'Fallon, IL
Correct Capital is an independent advisory firm that specializes in helping business owners establish retirement plans and succession plans for their businesses. There are numerous factors we believe make us unique from other investment advisory agencies in O'Fallon, IL, and across 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 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 perfectly positioned to understand the needs of each and create a plan that meets the requirements of both, as well as those of your stockholders.
- Our award-winning O'Fallon, IL 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 eight decades of combined experience, we pool our collective talents and insights to best serve each client distinctively.
- 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 establish long-term relationships with our clients grounded in trust and the mutual goal of expanding your and your employees' wealth.
Other services we offer in O'Fallon, IL:
- Succession Planning
- Fiduciary Financial Advisor
- 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
Call Correct Capital to Speak With an ESOP Advisor in O'Fallon, IL Today
If you're interested in learning more about ESOPs or aspire to commence the process of setting one up for your O'Fallon, IL business, get in touch with a Correct Capital ESOP advisor today. Let us do what we do best so you can prioritize on what you value most: positioning yourself, your business, and your employees up for success. Reach out with one of our O'Fallon, IL ESOP advisors now at 314-930-4015 or contact us online.