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10/13/97: ESOPs in S Corporations, from the
Online Library of the National Center for Employee Ownership. Excerpt:
In 1996, Congress allowed ESOPs and other employee benefit trusts to own stock in an S
corporation, effective January 1, 1998. Technical problems with the law, however, made it
impractical for most companies to take advantage of this change. In 1997, Congress amended the
law (effective January 1, 1998) to correct the technical flaws for ESOPs, but did not change
the rules for other benefit plans. The new law also provides S corporations sponsoring ESOPs
with a significant tax benefit, while excluding them from other tax benefits available to C
corporation ESOPs. Because this law is so new, the publications you receive may indicate either
that an S corporation cannot have an ESOP or that technical issues make it impractical to do
so. This article will explain the major changes made by the 1997 law.
Important word about authorship:
BenefitsLink ® (BenefitsLink.com) provides this page for you, with a hypertext link to an item we think is interesting and valuable for companies sponsoring employee benefit plans, employees who participate in plans, and firms who provide products and services to plans. But BenefitsLink is not the author of the item to which this hypertext link will take you (unless expressly indicated there).
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