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An Employee Stock Ownership Plan (ESOP) is a qualified, defined contribution, employee benefit plan primarily designed to invest in the stock of the sponsoring employer.
An ESOP allows qualified employees, typically defined by a minimum number of hours worked per year, to become owners in the company they work for and secure a future benefit for their retirement.
ESOPs are highly regulated under the federal Employee Retirement Income Securities Act. ESOPs do have a number of expenses and complexities associated with administering them, but they offer employees an opportunity to share in the benefits of corporate ownership.