Imagine your ESOP benefits being tax-free!
Making payments on your ESOP Loan with Roth Salary Deferrals can have tax-free Roth results, specifically for the value and appreciation in future allocations of Employer Stock as the ESOP Loan payments are made. If you have substantial appreciation in unallocated Employer Stock in your ESOP, you could be a perfect candidate for this planning. The benefits of making payments on your ESOP Loan with Roth Salary Deferrals can be quite impressive.
Success Story
We recently had an ESOP client with an $18.99 cost per share for its Employer Stock pay for some of the shares with Roth Salary Deferrals when the value of each share was $494.44. The Participants who directed their share of the ESOP Loan Payment to be paid from their Roth Salary Deferral Accounts leveraged $18.99 of Roth Salary Deferrals into shares of Employer Stock in their Roth Employer Stock Account worth $494.44 per share. We have been assisting clients doing so since 2006 when Roth Salary Deferrals were first allowed.
A leveraged ESOP with a §401(k) Designated Roth Contribution Program can cause what would otherwise be net unrealized appreciation (NUA) to be tax-free. Similarly, the amount that would otherwise be basis and taxable to the participant as ordinary income could also be tax-free.
If this opportunity intrigues you, and you would like your ESOP Participants to be able to receive some substantial Roth tax-free benefits from your ESOP, we can show you how. Special IRS approved provisions are required in an ESOP document to accomplish these results. We work well with others, including your present CPAs, attorneys and other ESOP advisors.
Do you want to know more? If so, we look forward to hearing from you.
