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Are ESOPs Really More Complex Than Other Ways to Sell a Business?

When people describe the pros and cons of ESOPs, often they note that the plans are complex. ESOPs are somewhat more complex than 401(k) and similar retirement plans and do cost substantially more to install and somewhat more to operate, mostly because an annual appraisal is required for closely held companies. But ESOPs are not more complex than selling to a third party. Corey Rosen, Executive Director of the National Center for Employee Ownership (NCEO), has created a chart to show ... Read more

Sanders Bills Would Boost Worker-Owned Businesses

Under one bill in Sanders' package, the U.S. Department of Labor would provide funding to states to establish and expand employee ownership centers. These centers would provide training and technical support for programs promoting employee ownership and participation throughout the country. This legislation is modeled on the success of the Vermont Employee Ownership Center which has done an excellent job in educating workers, retiring business owners, and others about the benefits of worker ownership. A second bill would create a U.S. ... Read more

IRS Revises Scope of Letter-Forwarding Program

On August 31, 2012, the Internal Revenue Service issued Revenue Procedure 2012-35, IRB 2012-37, revising the scope of the IRS letter-forwarding program. Revenue Procedure 2012-35 provides that the IRS will no longer forward letters on behalf of plan sponsors or administrators of qualified retirement plans or qualified termination administrators (QTAs) of abandoned plans under the Department of Labor’s Abandoned Plan Program who are attempting to locate missing plan participants and beneficiaries. Since the IRS letter-forwarding program began, numerous alternative missing person ... Read more

SES Client Sonnax Recognized as One of 2012’s Best Places to Work in Vermont

SES Advisors congratulates Sonnax and its employee owners on being recognized as one of the Best Places to Work in Vermont in the small/medium employer category. Founded in 1978, Sonnax is a diversified supplier of specialized drivetrain products to the automotive and commerical vehicle industries, and to industrial sectors utilizing drivetrain technology. Sonnax became a 100% employee-owned company in 2011. The Best Places to Work in Vermont project is a statewide program managed by Best Companies Group. The initiative is dedicated ... Read more

Update from NCEO CEO Loren Rogers on the DOL Re-Proposal

According to NCEO CEO Loren Rogers' monthly Employee Ownership Update, at a hearing of the House Committee on Education and the Workforce, Secretary of Labor Hilda Solis responded to questions from many members of Congress about the agency's proposal to change the definition of a plan fiduciary. However, many questions are still unanswered, including the exact language affecting ESOP ficiduciaries that will be used in the re-proposal, and when exactly the re-proposal will be issued. Read more on the NCEO website Read more

ESOP Company King Arthur Flour Becomes a Vermont Benefit Corporation

According to their recent press release, King Arthur Flour is America's oldest flour company and premier baking resource. In becoming a Benefit Corporation recognized by Vermont state law, King Arthur Flour must adopt a corporate purpose of creating a material positive impact on society and the environment, and to require its directors to consider non-financial interests when making decisions. King Arthur Flour has also been named to the first "Best for the World" list as a business creating the most positive worker ... Read more

Competitiveness through Employee Ownership in the Forestry Industry: University of Wisconsin Releases ESOP Manual

Authors Scott Bowe and Robert Govett of the University of Wisconsin, and Terry Mace of the Wisconsin Division of Forestry, Department of Natural Resources, have issued a comprehensive guide explaining how ESOPs can be used in the Forest Products industry to create long-term sustainablity for the company while providing stable employment in the local community. Visit The ESOP Association blog. Read more

White House Budget and ESOPs

According to the February 15 release of the NCEO Employee Ownership Update, the Obama administration's revenue proposals make a specific reference to ESOPs. Loren Rodgers, Executive Director of NCEO, reports that the administration proposes clarifying the tax implications for the transfer of qualified replacement property to a spouse in connection with an ESOP transaction. To read the full press release, please visit the The NCEO's website. Read more

DOL Works on Re-Proposal

In the February 15 NCEO Employee Ownership Update, Loren Rodgers reports on plans by the Department of Labor's Employee Benefits Security Administration to re-propose a regulation that would make appraisers of ESOP plan transactions fiduciaries of the plan. In September 2011, the department withdrew its original proposal that would have made the appraisers of ESOP plans fiduciaries on an annual basis. The re-proposal focuses only on transaction appraisals. To read the full press release, please visit the The NCEO's website. Read more

Employee Owners’ Jobs More Stable in a Nervous Economy

This morning the Employee Ownership Foundation released new information from the 2010 General Social Survey that shows employee owners' jobs are more stable. Employees in the U.S. who had employee stock ownership were four times less likely to be laid off during the Great Recession than employees without employee stock ownership. According to J. Michael Keeling, President of the Employee Ownership Foundation and The ESOP Association, "These numbers confirm what observers of employee stock ownership have been saying for years. Employees with ... Read more

Iowa Governor Announces ESOP Initiative

According to this week's Employee Ownership Update, written by NCEO's Executive Director Loren Rogers, Iowa Governor Terry Branstad announced in his Condition of the State speech on January 10 that promoting employee ownership would be one of his three top economic priorities. The Republican governor announced three main tools to support employee ownership: Business owners would not have to pay state capital gains taxes for sales to ESOPs. That rate is 9% in Iowa. The Economic Development Authority (EDA) would offer technical ... Read more

2012 Cost of Living Increases for Dollar Limitations on Benefits and Contributions

On October 20, 2011 the Internal Revenue Service announced cost-of-living adjustments applicable to dollar limitations for pension plans for tax year 2012. A copy of the following 2012 COLA Increase chart is available for download in pdf format. Read more

Introducing New Employees into ESOP Company Work Culture

Ginny Vanderslice, President of Praxis Consulting Group in Philadelphia, authored an article in the November 2011 issue of The ESOP Association’s ESOP Report newsletter which outlined case studies from successful ESOP companies on how to introduce new employees into your ESOP company’s work culture. Gardener’s Supply and King Arthur Flour, clients of our sister law firm, Steiker, Greenapple, & Fusco, P.C., were highlighted for their programs that immerse employees more deeply in understanding the ownership culture within their first year of ... Read more

Benefits of S Corporation ESOPs

This article from the Employee-Owned S Corporations of America (ESCA) website describes the benefits of S corporation ESOPs - from higher than average retirement account balances to the increase in employment at S corporation ESOP companies during the recession. Study results from the National Center for Employee Ownership (NCEO) and the recent introduction of the pro-ESOP bill (House Resolution 1244) are discussed. To read the full article, visit the Employee-Owned S Corporations of America website. Read more

Former Assistant Treasury Secretary Speaks in Support of S ESOPs

In a statement to the Senate Finance Committee during the September 15, 2011 hearing on “Tax Reform Options: Promoting Retirement Security,” a former Assistant Treasury Secretary to the Senate described the benefits of S corporation ESOPs. According to Phillip L. Swagel, who served as assistant secretary for economic policy at the Treasury Department during the George W. Bush administration, “S ESOPs make substantial contributions to workers’ retirement security. They do this by giving employees ownership of the company and building their ... Read more
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