An employee stock ownership plan, or ESOP, may be the perfect choice for an employer who wants to give employees an equity stake in the business, or design a tax-favored strategy to transfer control of the business from one generation of management to the next. These plans are designed to invest primarily in stock of the employer, and can be eligible for special exemptions from certain qualification rules which allow them to engage in otherwise prohibited transactions to acquire employer stock or permit deductible contributions that exceed the limits applicable to other defined contribution plans.
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