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)

If a private company becomes publicly traded, can it amend its distribution policy to eliminate the put option?

Treas. Reg. § 1.411(d)-4, Q&A 2(d)] does allow this. These ESOP exceptions permit distribution options to be modified so long as it is done in a nondiscriminatory fashion. [IRC § 411(d)(6)(c)]

Prior to the change, participants must be provided with the appropriate forms and a notice that meets the 402(f) Safe Harbor Notice requirements no less than 30 days (subject to waiver) and no more than 180 days before the date of which a distribution is made.

Link to this FAQ Topic: Distributions & Repurchase