What is ‘KSOP’
A qualified retirement plan that combines an employee’s stock ownership plan (ESOP) with a 401(k). Under this type of retirement plan the company will match employee contributions with stock rather than cash. KSOPs benefit companies by reducing expenses that would arise by separately operating an ESOP and 401(k) retirement plans.
Explaining ‘KSOP’
Using a KSOP is a great option for companies when their shareholders are looking to sell their shares in the company. The KSOP instantly creates a market with sufficient liquidity that is needed for those shareholders wishing to sell their stake. KSOPs also provide added motivation to employees to ensure the profitability of the company. This is because the added profitability would directly enhance their retirement plans.
Further Reading
- The law and economics of company stock in 401 (k) plans – www.journals.uchicago.edu [PDF]
- Are empowerment and education enough? Underdiversification in 401 (k) plans – muse.jhu.edu [PDF]
- Own company stock in defined contribution pension plans: A takeover defense? – www.sciencedirect.com [PDF]
- Pensions, corporate finance, and public policy – dspace.mit.edu [PDF]
- An assessment of employee ownership in the United States with implications for the EU – www.tandfonline.com [PDF]
- What Determines Company Stock in Defined Contribution Plans? – www.dbpia.co.kr [PDF]
- The role of company stock in defined contribution plans – www.nber.org [PDF]
- Company stock in pension funds – www.jstor.org [PDF]
