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KSOP

What is 'KSOP'

A qualified retirement plan that combines an employee's stock ownership plan (ESOP) with a 401(k). Under this type of retirement plan the company will match employee contributions with stock rather than cash. KSOPs benefit companies by reducing expenses that would arise by separately operating an ESOP and 401(k) retirement plans.

Explaining 'KSOP'

Using a KSOP is a great option for companies when their shareholders are looking to sell their shares in the company. The KSOP instantly creates a market with sufficient liquidity that is needed for those shareholders wishing to sell their stake. KSOPs also provide added motivation to employees to ensure the profitability of the company. This is because the added profitability would directly enhance their retirement plans.


Further Reading


The law and economics of company stock in 401 (k) plans
www.journals.uchicago.edu [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

Are empowerment and education enough? Underdiversification in 401 (k) plansAre empowerment and education enough? Underdiversification in 401 (k) plans
muse.jhu.edu [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

Own company stock in defined contribution pension plans: A takeover defense?Own company stock in defined contribution pension plans: A takeover defense?
www.sciencedirect.com [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

Pensions, corporate finance, and public policyPensions, corporate finance, and public policy
dspace.mit.edu [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

An assessment of employee ownership in the United States with implications for the EUAn assessment of employee ownership in the United States with implications for the EU
www.tandfonline.com [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

What Determines Company Stock in Defined Contribution Plans?What Determines Company Stock in Defined Contribution Plans?
www.dbpia.co.kr [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

The role of company stock in defined contribution plansThe role of company stock in defined contribution plans
www.nber.org [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …

Company stock in pension fundsCompany stock in pension funds
www.jstor.org [PDF]
… The Law and Economics of Company Stock in 401(k) Plans. Shlomo Benartzi, University of California, Los Angeles … For example, John Hancock Financial Services (1999) reports that only 18 percent of employees realize that their employer's stock is riskier than a stock fund …



Q&A About KSOP


What are some benefits of a KSOP?

The KSOP reduces expenses that would arise by separately operating an ESOP and 41(k) retirement plans.

Why do shareholders want to sell their shares in a company using a KSOP?

Shareholders are looking to sell their stake because they can get liquidity from selling their shares in the company through the use of a KSOP.

How does a KSOP benefit companies?

A KSOP allows companies to reduce expenses that would arise by separately operating an ESOP and 41(k) retirement plans.

How does a KSOP provide added motivation for employees?

Employees will be motivated because they will have more money to invest in their 401Ks or other investment vehicles if the company is doing well financially. This is due to the fact that they will have more money invested with them through matching contributions from the employer, which increases as profits increase for the business.