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   Employee Stock Ownership Plan (ESOP)
   















 

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Employee Stock Ownership Plan (ESOP)

A trust organized under the provisions of the original ERISA legislation to permit a sponsoring company to transfer shares of its stock in tax-deductible contributions for the ultimate benefit of the company's employees upon their retirement. ESOPs are defined contribution pension plans with the maximum annual contribution limited to 25% of the company's payroll. For some companies the shares held by an ESOP have become a significant part of the corporate capitalization.

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