Are you a Plan Participant in an ESOP? Do you believe the ESOP was not properly managed?
An ESOP is a type of retirement plan designed to provide employees with an ownership interest in the company. The plan invests primarily in stock of the employer. ESOPs are unlike other retirement plans, which typically diversify their holdings by investing in a variety of assets. The ESOP is funded with tax-deductible contributions by the employer, which can be in the form of company stock or in cash that is used to purchase company stock. An ESOP operates through a trust, under the direction of a trustee or other named fiduciary.
The Employee Retirement Income Security Act of 1974 (ERISA) protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire.
ERISA is a federal law that sets minimum standards for pension plans in private industry. Under ERISA, ESOPs are subject to fiduciary duties owed to the plan participants. If a ESOP trustee or other fiduciary violates those duties, they may be liable to the participants for their losses.
If you have questions about your ESOP, Donahoo & Associates can help. Contact us for a free case evaluation today.