Participation in employee stock ownership plans (ESOPs) grew 8% from 2014–2023. Now, the Department of Labor (DOL) is encouraging more employers to offer the benefit, according to a new report. ESOPs allow employees to become part owners in their employer’s business. Ownership can grow over time, and can be offered instead of or in addition to a 401(k) plan. The US government established this type of ownership model in 1974 to help close the wealth gap, but has encouraged employers to offer it more frequently in recent years. The report was released as part of the requirements outlined in the SECURE 2.0 Act of 2022, which requires the DOL to educate businesses on and encourage adoption of employee ownership through, for example, tax benefits, which are available to companies that are at least 30% employee owned. Roughly half of ESOP plans have “fewer than 100 participants,” and 67% are offered by companies that also provide other retirement benefits, including 401(k)s, according to the report. The 8% increase saw 15.1 million employees participate in an ESOP in 2023; 14 million participated in 2014, the report found. However, the number of participating businesses has remained consistent over the past decade. For more on how the federal government is encouraging ESOPs, keep reading here.—KP |