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Employee Stock Ownership Plans 65 ESOPs must use one form or the other to qualify employees. Employees who leave the company before they are 100-percent vested stand to lose some or all of their benefits. Employees who are 100-percent vested are entitled to their stock or equivalent benefit when they leave the company. Stock or Cash When you leave the company or retire, the ESOP must distribute your 100-percent vested stock or buy it back from you. The ESOP documentation will spell out the distribution procedure and the timetable. Many factors can affect the process, so be sure and check your documentation for your ESOP's policy. Don't assume you will receive the stock or cash immediately, although that may happen. If you are nearing retirement or planning to leave the company soon, you should check with the ESOP trustee for the details particular to your company's plan. Under certain conditions, the payout can occur over a period of a few years in equal installments. Caution It is extremely important for you to understand the particular details of your plan. Every plan must meet certain basic requirements by law, but beyond that they have some latitude in the details. Many private companies (about 90 percent of the companies offering ESOPs) have rules about selling stock to outsiders. Since there isn't a readily available public market for the stock, many ESOPs will require you to sell your stock back to the trust or the company. They may also convert your stock to cash and distribute the proceeds that way.