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Chapter 15. Shopping at the Company Stor... > Employee Stock Ownership Plans - Pg. 149

149 Chapter 15. Shopping at the Company Store In This Chapter · The shelves are stocked with goodies · ESOPs are not a fable, but a retirement plan · Stocking the shelves with ISOs and NSOs · Which shelf is the ESPP on? The guys in Washington are really going to let your company stock the company store with goodies that benefit the employee. Some goodies are good, and some are even better than good, but you have to be at the right company to get them. When shopping at the company store, you have qualified shelves and unqualified shelves. The rules are the same. If you've got something on the qualified shelf, the IRS says that you've got to either leave it there until age 59½ or roll it into an IRA when you leave the company or retire. On the other shelf you can get at the goodies, but you'll be taxed--in most instances, as soon as it gets put in your shopping bag at the checkout counter. We've discussed 401(k) plans as the choicest item on the qualified shelves. But there are other items there--ones with funny names like ESOPs, ISOs, NSOs, and ESPPs. Let's find out what they are and what they have to offer. Employee Stock Ownership Plans An employee stock ownership plan (ESOP) is a way to benefit the employee and the employer. Win- win situations like this don't come along too often. ESOPs have been around since 1954, but until 1974 there was no clear legislation from Washington supporting the tax structure of ESOPs. Ac- cording to The ESOP Association, there are approximately 11,500 ESOPs in existence covering 8.5 million participants today. And over the years, as tax laws have changed and become more complicated, ESOPs have endured and grown.