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 contributions to an ESOP for a tax year be made after the end of that tax year?

Contributions for a given tax year can be made at any time up to the final due date for the company's tax return for that year, which can be as much as eight and a half months after the end of the year if an extension is obtained. These contributions must be allocated based on compensation from the year for which the contribution is counted, however.

This applies, however, only if the plan is already set up in the tax year in question. Contributions to a plan set up in fiscal 200X, for instance, are not deductible for fiscal 200X-1 no matter when they are made. In addition, where there is an ESOP loan, the loan must have been in place by year end and shares must be deemed to have been released effective to the date the contribution is effective.

Link to this FAQ Topic: ESOP Plan Design & Participation