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.

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Can the ESOP repurchase of shares be delayed until after loan repayment in cases of death or retirement?

For death, distribution does not have to start right away, but must be made to the beneficiary and completed within five years, regardless of the loan status. For retirement, distribution must start no later than the 60th day after the end of the plan year in which the later of these events occur: 1) the participant reaches age 65 or, if earlier, the plan's normal retirement age, 2) termination of service, or 3) the 10th anniversary of participation in the plan or a predecessor plan. While the law allows such delays, these policies could be bad for morale and distribution would normally start sooner.

Link to this FAQ Topic: Distributions & Repurchase