The Straight Scoop on ESOPs: Why Is This Employee Benefit Plan So Popular in the Engineering Industry?  - CLEO Skip to main content


Employee Stock Ownership Plans (ESOPs) are nothing new in the engineering industry. ESOPs have been around in oneform or another since 1974 when provisions to the Employee Retirement Income Security Act allowed for retirementplans that invested in employers’ stock. However, it wasn’t until the mid-1980s that ESOPs really became popular. Atthis time, newly created tax incentives made these plans financially effective, particularly as a structure forleveraged buy-outs.

Over the years, various legislative changes have made ESOPs even more attractive and available to more companies.

In 1998, S-corporations became eligible to sponsor ESOP plans, and other recent legislation has resulted in increased limitations for annual ESOP contributions.