Katten - Employee Stock Ownership Plans Brief
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Transcript of Katten - Employee Stock Ownership Plans Brief
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8/8/2019 Katten - Employee Stock Ownership Plans Brief
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EMPLOYEE STOCK OWNERSHIP PLANS
Katten Muchin Rosenman LLPs ESOP attorneys have exten-
sive experience in the proactive development of ESOPs in
connection with overall business and estate planning by
companies and their owners. We help clients use ESOPs as a
vehicle of corporate nance in complex transactions and as
an employee benets program.
Our attorneys advise clientsincluding ESOP plan sponsors,
duciaries and lenderson day-to-day operational issuesas well as governmental audits and investigations. We also
counsel clients on the overall impact that ESOPs will have
on employee benets programs, cash-ow planning and
corporate governance.
Tax Breaks with ESOPs
Corporations and selling shareholders get ve major tax
advantages from ESOPs:
Employees participating in an ESOP do not pay taxes
on allocated stock until receiving distributions upon
termination of employment.
The owner of a closely held C corporation can defer
taxation on gain from the sale of employer stock to the
ESOP if the ESOP owns 30% or more of the employers
equity after the sale and the seller reinvests the sale
proceeds in stocks, bonds or other securities of U.S.
operating companies within 12 months after the sale.
Contributions to the ESOP, including both principal
and interest on loans the ESOP uses to buy employer
stock, can be deducted by the employer. ESOPs can
have greater contribution and deduction limits than
prot sharing plans typically have.
ESOPs sponsored by S corporations are not taxed on
their share of corporate earnings.
If a C corporation, the employer generally can deduct
reasonable cash dividends paid on ESOP stock thatare used to repay an ESOP loan or passed through to
participants.
Employee Benefts and ExecutiveCompensation
Kattens ESOP attorneys are a part of the Employee Ben-
ets and Executive Compensation Practice, which provides
comprehensive services in planning, designing and imple-
menting executive compensation and employee benets
programs for organizations of all sizes and structures in the
United States and abroad. Our extensive national practiceincludes partners and associates in key business locations
across the United States, including New York, Chicago,
Washington, D.C., and Charlotte.
Combined, these attorneys have more than 200 years of
executive compensation and employee benets experience,
including positions with the Internal Revenue Service, Depart
ment of Labor and Pension Benet Guaranty Corporation.
Employee stock ownership plans (ESOPs) oer
extraordinary benefts to companies and their
shareholders. In addition to tax advantages,
ESOPs provide a market or the shares o
closely held businesses and motivate greater
employee productivity.
Benefts o ESOPs
Owners of closely held businesses can sell their
shares to the ESOP on a tax deferred basis.
ESOPs provide tax advantages in the nancing of:
acquisitions;
capital improvements;
charitable giving; and
purchase of shares of a retiring owner.
Corporate performance improves as employees
are motivated to grow the value of company stock.
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Contact Us
For more information on our ESOP Practice,
please contact:
Gregory K. Brown
312.902.5404 / [email protected]
Gary W. Howell
312.902.5610 / [email protected]
Ann M. Kim312.902.5589 / [email protected]
Daniel B. Lange
312.902.5624 / [email protected]
Kathleen Sheil Scheidt
312.902.5335 / [email protected]
Nancy Laethem Stern
312.902.5353 / [email protected]
One of the most important components of our Employee
Benets and Executive Compensation Practices overall
philosophy is our ability to resolve legal issues that do not
have well-dened answers in an efcient and pragmatic
manner. This is particularly true with respect to benets
and compensation matters where regulatory positions are
not fully developed. We are leaders in a changing industry,
and our focus is on providing creative, practical solutions to
employers legal problems. We are routinely sought out ona national basis for our specic skill and experience in areas
such as:
the impact of corporate transactions on employee
benets programs;
design and implementation of non-traditional
plans, such as cash balance plans and executive
compensation;
ERISA duciary matters, including reexamining du-
ciary structures and investment policies and proce-
dures post-Enron;
retirement plan compliance and design;
VEBAs, retiree medical and health reimbursement
accounts;
managed care contracting and HIPAA;
401(k) plan matters, such as 404(c) compliance, stable
value and company stock fund matters;
alternative investments, such as hedge funds and
derivatives; and
drafting and negotiating outsourcing contracts with
vendors to plans or to plan sponsors.
About the Firm
Katten Muchin Rosenman LLP is a full-service law rm with more than 600 attorneys in locations across the United States
and an afliate in London. The rms business-savvy professionals provide clients in numerous industries with sophisticated,
high-value legal services, with a focus on corporate, nancial services, litigation, real estate, commercial nance, intellectual
property and trusts and estates. Among our clients are a wide range of public and private companies, including a third of
the Fortune 100, as well as a number of government and nonprot organizations and individuals. For additional information,
visit www.kattenlaw.com.
CHARLOTTE CHICAGO IRVING LONDON LOS ANGELES NEW YORK WASHINGTON, DC
Published as a source of information only. The material contained herein is not to be construed as legal advice or opinion.
2010 Katten Muchin Rosenman LLP. All rights reserved.
Circular 230 Disclosure: Pursuant to regulations governing practice before the Internal Revenue Service, any tax advice contained herein is not intended or written to be used and cannot
be used by a taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Katten Muchin Rosenman LLP is an Illinois limited liability partnership including
professional corporations that has elected to be governed by the Illinois Uniform Partnership Act (1997). London afliate: Katten Muchin Rosenman Cornish LLP.
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