Can an S corporation set up an ESOP?

Effective January 1, 1998 it became advantageous for an ESOP to be a shareholder of an S corporation under the federal tax laws.

Yes. Effective January 1, 1998 it became advantageous for an ESOP to be a shareholder of an S corporation under the federal tax laws. To the extent that the S corporation is owned by an ESOP, no federal income taxes on corporate income are payable by either the shareholder or the company. This can create a significant competitive advantage for S corporations which are substantially ESOP owned.

Explore SES ESOP Strategies’ ESOP design and installation services and then contact us to learn more about how we can help you explore options for plan structure.