Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

Can a plan participant roll an ESOP distribution into a Roth IRA?

It is possible to do this, but the distribution rolled into the Roth IRA is taxable as ordinary income. It then comes out of the Roth IRA upon distribution tax free. The rollover is not subject to excise taxes on early distributions.

Link to this FAQ Topic: Distributions & Repurchase