Employee Stock Ownership Plans (ESOPs)

This Note provides an overview of employee stock ownership plans (ESOPs) under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (IRC). An ESOP is a stock bonus plan, or a stock bonus plan combined with a money purchase pension plan, that is designed to invest primarily in “qualifying employer securities” and satisfies other specific requirements set out in ERISA and the IRC.