ESOP advisor in St. Clair County, IL. Employee stock ownership plans (ESOPs) have become an increasingly popular retirement benefit for employees in various industries in St. Clair County, IL. They offer business owners an opportunity to pass the torch from their company while considerably reducing taxes on the sale, and offer employees a qualified retirement plan that increases their productivity and motivation. However, designing, implementing, and maintaining an ESOP isn't something most St. Clair County, IL business owners can do by themselves. Correct Capital's seasoned and savvy ESOP advisors help businesses of all sizes, in St. Clair County, IL and around the nation, establish tailored retirement plans that benefit themselves, their employees, and their bottom line.
If you're looking for an experienced financial partner in St. Clair County, IL who shares your goals of building your company and employees for prolonged success, call Correct Capital at 877-930-4015, contact us online, or schedule an appointment with one of our financial advisors at this moment.
What Is an Employee Stock Ownership Plan (ESOP)?
An ESOP is a qualified retirement plan where employees receive shares of the company that employs them, rather than savings funds or investments in other companies such as in a 401(k). ESOPs are fully funded by the employer, and often times shares offered to employees are not voting shares, meaning control of the company stays with ownership and other executives. 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 maintaining control. Upon reaching retirement, most employees sell the stock at marketplace value.
Perhaps most importantly, by handing over part of your ownership to the ESOP, owners can defer capital gains taxes, allowing you to distribute that tax hit instead of having to pay taxes at once. In many cases, ESOPs are a transition plan that keeps the most amount of money feasible 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)
- 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 exempt from federal income taxes
- Align the goals of employees and stockholders
- Provide a higher value proposition when hiring
- Increase employee motivation and productivity
- Improve employee retention and loyalty
- Enable succession planning and business continuity
- Retain control while arranging or easing into retirement
- Boost personal liquidity of owners, but still keep control of the company
- Preserve your business' legacy and culture
What About KSOPs?
A KSOP is a tax-advantaged plan that is a mix between an ESOP and a 401(k). Ownership shares are offered to employees as in an ESOP, employees can put in their own money to buy additional stock through payroll deductions, or the company can match employee contributions with stock 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 St. Clair County, IL ESOP advisors and retirement consultants of Correct Capital can assist you find the best retirement plan for you, your company, and your employees.
How Our St. Clair County, IL ESOP Advisors Can Help
Whether you're motivated by a succession plan, employee incentives, or any other of ESOPs' benefits, you'll need a knowledgeable St. Clair County, IL ESOP advisory firm by your side 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 transfer your ownership shares to an ESOP, you can reinvest the proceeds in different securities to defer capital gains taxes on the sales, permitting you to retain more of the profit. To defer 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 owed until the taxpayer has a disposition of the QRP. An ESOP advisor can ensure you obtain the most tax benefit from your ESOP.
- Personalize your ESOP and retirement plans — Along with your team, we'll create and implement an ESOP suited specifically to you and your company. We like to test ourselves and our clients to get imaginative with retirement plan offerings to enhance the advantages they provide. We'll examine your needs, assess several 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 identify the best qualified retirement plans for their company. 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 analyze:
- 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 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 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, attorneys, and a trustee to purchase stock of the company on behalf of the ESOP. An experienced ESOP advisor with a strong network in St. Clair County, IL can help you set up your ESOP team with dependable partners.
- Ensure compliance — IRS, Department of Labor, and ERISA all have strict regulations for the management of retirement plans. For instance, when employees participating in an ESOP 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 fair 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 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 react to them in real time, facilitating your plan to stay workable, compliant, and beneficial.
- Employee communication and education — Our ESOP advisors offer group meetings 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 share of your company, but they'll feel like they're achieving ownership of their economic well-being and eventual retirement.
Why Choose Correct Capital as Your ESOP Advisor in St. Clair County, 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 several factors we believe make us unique from other financial consulting companies in St. Clair County, IL, 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 know retirement plans and ESOPs. Correct Capital's clients currently operate these plans in a variety of sectors, including for construction companies and contractors. As we work with both businesses and individuals and families when managing retirement plans, we're ideally suited to understand the demands of each and create a plan that fulfills the necessities of both, as well as those of your stockholders.
- Our award-winning St. Clair County, IL financial advisory team is composed 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 legally and morally bound to do what's in the utmost benefit of you, your employees, and your company. We aim to form long-term relationships with our clients founded on trust and the mutual goal of increasing your and your employees' monetary well-being.
Other services we offer in St. Clair County, IL:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- Self-Employed Retirement Plans
- 401(k) For Small Business
Call Correct Capital to Speak With an ESOP Advisor in St. Clair County, IL Today
If you're interested in learning more about ESOPs or aspire to commence the process of setting one up for your St. Clair County, IL business, reach out to a Correct Capital ESOP advisor today. Let us do what we do best so you can concentrate on what you value most: establishing yourself, your business, and your employees up for achievement. Reach out with one of our St. Clair County, IL ESOP advisors now at 877-930-4015 or contact us online.
