Learn how ESOPs provide tax benefits and succession planning flexibility, ensuring business stability and employee ownership.
Many closely held businesses have little or no succession plan in place. As a result, the day a founder or primary shareholder leaves the business often results in significant adverse consequences for the company, the employees, and the exiting owner. ESOPs offer transitional flexibility that can facilitate succession planning. An ESOP is a tax- qualified retirement plan authorized and encouraged by federal tax laws. Unlike most retirement plans, ESOPs:
- Are required by law to invest primarily in the shares of stock of the sponsoring employer.
- Are trusts that hold shares of the business for employees, making them beneficial owners of the company that employs them.
- Can provide tax benefits to the company and to the exiting owner(s).
Attendees can learn the basics of this valuable tool for business succession in this course and leave equipped with an introduction to ESOPs which can be useful in advising clients on business succession.
Learning Objectives
- You will be able to identify Identify different business succession strategies.
- You will be able to recognize the the characteristics of a good ESOP candidate.
- You will be able to explain how financing works for ESOP transactions.
- You will be able to describe how shares are allocated to participants.
Agenda
Business Succession Planning Options
- Options
- A Good ESOP
- Candidate Profile
ESOP Tax Benefits for Selling Shareholders
- IRC Section 1042
ESOP-Owned Company Tax Advantages
- S-Corporations and ESOPs
Feasibility Analysis
- Score
- Who Conducts?
- Results
Leveraged ESOP Transactions
- Financing Sale to an ESOP
- Structure
- Effect of Leverage
- Alternatives
Costs and Expenses
- ESOP
- ESOP Compared to Other Business Succession Alternatives
ESOPs Are Retirement Plans
- Defined Contribution Plan
- Participation and Vesting
- Diversification
- Distributions
The Employee Ownership Incentive
- Economic Performance of ESOP Companies
- Recruiting/Retention Tool
- Corporate Governance in an ESOP Company
The Employee Stock Ownership Plan Trust
- Trustee Considerations
- Participant Allocations
The Company Repurchase Obligation
ESOP Participant Voting
- Passthrough Voting
The Regulatory Environment
- Department of Labor
- Internal Revenue Service
- Current Developments, Opportunities and Challenges
Example of a Standard Leveraged - ESOP Transaction
Speakers
Todd Denison,
Phelps Dunbar LLP- Partner with Phelps Dunbar LLP
- Represents individuals and business entities in the areas of business transactions and operations, partnership and corporate taxation, real and personal property transactions and trust and estates (including sophisticated estate planning), charitable organizations (formation and operations), employee stock ownership plans and other qualified retirement plans, captive insurance, international transactions and taxation, tax controversies with the IRS and elder law
- Clients include a regional engineering firm, national advertising agency, regional construction firm, regional stone and interior design firm and numerous family-owned businesses operating locally, regionally and internationally
- Frequent speaker and has several publications
- Member of numerous professional and civic organizations
- Achieved the highest rating with Martindale-Hubbell Law Directory
- The Best Lawyers in America© (Woodward/White, Inc.), Business Organizations (including LLCs and Partnerships) in Mobile, 2019; Tax Law in Mobile, 2018-2019; Trusts and Estates in Mobile, 2018-2019
- LL.M. degree, New York University School of Law; J.D. degree, University of Montana School of Law; M.A. and B.A. degrees, University of Montana
- Can be contacted at 251-441-8206 or todd.denison@phelps.com
Who Should Attend
This live webinar is designed for accountants, CPAs, CFOs, controllers, tax managers, tax preparers, finance directors and planners, presidents, vice presidents, executive directors, business owners, bookkeepers, and attorneys.
