What is an ESOP by the ESOP Association

What Is An ESOP?

Employee Stock Ownership Plans (ESOPs) are retirement plans, governed by some of the same laws and regulations as 401(k) plans. ESOPs, though, are fundamentally different from 401(k)s, offering far more advantages to businesses, owners, employees, and communities.

ESOP Fast Facts

ESOP Holdings in the United States
  • ESOPs boost employee engagement. When ESOPs are formed, shares of company stock are allocated to all employees, making them employee owners who share in the rewards if the stock rises and the risks if the stock falls. As a result, they are more invested in helping the business succeed and more likely to tackle problems, such as helping co-workers who are underperforming.

  • Most ESOPs require no out-of-pocket contribution from employees. For plenty of people, funding a contribution to a 401(k) each paycheck is a struggle. For employees like these, an ESOP might be the only retirement plan in which they can afford to participate.

  • ESOPs help narrow the wealth inequality gap. Employees at ESOP companies tend to earn higher wages and have greater savings than their peers in non-ESOP companies. In 2018, ESOPs distributed $126.7 Billion nationally.

the power of esops

Employee Owners in the United States
(that's more than the entire auto industry)
ESOP Companies
Top Industries
for ESOP Companies are:

Not Just a Retirement Plan

Insurance Program

In the simplest terms, an ESOP is a retirement plan. In reality, an ESOP is so much more than that.

ESOPs provide unique benefits to the employee owners, the institutions, and the surrounding communities that they are involved with. ESOPs have been proven to:

          and so much more!

Who Benefits Most From ESOPs?

Free Resources From The ESOP Association

ESOP Brief #1 - Benefits & Requirements

Get a concise overview of the benefits ESOPs provide and what it takes to set one up.

ESOP Brief #2 - How To Establish an ESOP

Get a quick overview on what is involved in establishing an ESOP at your company.

ESOP Brief #3 - ESOP Tax Advantages

Find out how ESOPs provide tax advantages to C and S corporations.

Looking for More Information?

Membership with The ESOP Association affords you access to the best ESOP events.

Join TEA 

Companies that are considering an ESOP, have an ESOP, or provide services to ESOPs are all encouraged to join our engaged, passionate community. The best information you can get is from other ESOPs that are on the same journey.  


Press Inquiries

If you are a reporter working on a story or simply want to learn more about ESOPs, reach out and we will be happy to share information and research, connect you to our members, and provide interviews.