Skip to content

Timing is Everything

jerry ripperger's picture

Our annual ESOP client meeting was held last Wednesday, November 7th  prior to the start of The ESOP Association Conference and Trade Show.  More importantly, it was held a mere 16 hours after the election polls closed on the west coast.  As you might expect, the election, and its aftermaths, took center stage.

It was evident from the participant’s comments that elections have consequences.  Whether you are red or blue, have an R or a D as your party affiliation, the results matter.  And what the election results mean is certainly less than clear.  What is clear, healthcare, regulation, and tax policy are major concerns to companies with Employee Stock Ownership Plans (ESOPs).


As with most other businesses, the attendees are struggling to quantify the impacts of the Affordable Care Act.  Last summer’s U.S. Supreme Court Ruling clarified many questions but others remain elusive prior to the rapidly approaching January 1, 2014 implementation date for many major provisions.Will they have to cover additional employees?  Will they change employee schedules to avoid the mandate? Will they have to amend their plan to meet the minimum coverage?   Will there be additional court decisions that change direction?  It is obvious that this issue will take considerable attention during 2013.

Regulation continues to garner significant attention (the significance of which depends on the industry).  As with healthcare, this is not isolated to ESOPs.  Will the industry be facing more or less regulation?  What will it do to their cost structure?  The real impact of the election on regulation won’t be known for some time.

But tax policy does differ for ESOP companies.  The tax benefits afforded to ESOPs make them an attractive solution for many companies and business owners.  The tax benefits allow employees to accrue potentially significant retirement benefits.  The flow through treatment of ESOP S-Corporations provides significant advantages to the company (and therefore the employees).

Will tax reform happen?  If there is reform, how encompassing will it be?  Only time will tell.

In addition to blogging here, I also tweet regularly about topics of interest to ESOPs. Follow me:@jlripperger.

Follow my ESOP Blog

Your turn…

Please share your thoughts in the comment section below. I read and respond to comments. So let me help!

No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.Company stock is not a pooled investment. Stock may experience greater volatility and should not be directly compared to investment options that have a more diversified investment mix. It is not intended to serve as a complete investment program by itself.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

 Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.  

Disclosure Affiliations


No comments yet

Leave a Comment

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: