{"type":"rich","version":"1.0","provider_name":"Transistor","provider_url":"https://transistor.fm","author_name":"Wealthyist","title":"Wealthyist E72 | ESOPs: The Quiet Path from Company Stock to Wealth (and How to Keep the IRS from Taking Too Much)","html":"","width":"100%","height":180,"duration":971,"description":"In this episode of Wealthyist, financial planning manager Tom Berkholtz sits down with senior wealth strategist Brian Lamborne of Annex Private Client to demystify Employee Stock Ownership Plans (ESOPs)\nWhat an ESOP really isAn ESOP lets a business owner sell the company to its employees. Employees rarely have cash to buy it outright, so a trust/fund is created that purchases the owner’s stock. Over time, shares are allocated to workers. For the seller, this can mean a large liquidity event (e.g., tens of millions of dollars) that requires careful planning. For employees, it functions much like a 401(k): it is ERISA-governed, tax-deferred, and funded primarily by employer contributions of company stock—no employee contributions required. Shares vest over time, and the stock of private companies is independently valued each year.\nReal-world impactFamiliar employee-owned companies such as Wisconsin’s Woodman’s, Hy-Vee, and Publix illustrate the upside. Long-tenured cashiers and other rank-and-file workers have walked into Annex with ESOP balances exceeding $1 million—and sometimes several million—after decades of steady contributions and company growth. These “secret millionaires next door” often never attended college yet built substantial wealth simply by staying and performing well.\nKey features and rulesConcentration risk: Most of the account sits in employer stock while you work there. Diversification window: Once you reach age 55 and have 10 years of service, you can diversify up to 25% of the company stock over five years, then up to 50% in the sixth year—tax-free, just like selling inside a 401(k). Retirement liquidity: When you leave or retire (and are vested), the company typically buys back your shares, giving you cash that can be rolled into an IRA. Tax time bomb: The balance is pre-tax. Large accounts can produce very high Required Minimum Distributions (RMDs) starting at age 75 and push retirees into top tax brackets—especially if both spouses have...","thumbnail_url":"https://img.transistorcdn.com/qGrVF3x5hFIhTcfRmZqwI5cWDYeStA3lwZ1z54k8q18/rs:fill:0:0:1/w:400/h:400/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS83MWRm/YWQ1NmRjOWIwNmNm/MjExZmE3MjViNTU0/Njk5NC5qcGc.webp","thumbnail_width":300,"thumbnail_height":300}