An employee stock ownership plan (ESOP) is a retirement plan—in some ways similar to and governed by the same laws and regulations as a 401(k). In other ways, ESOPs are quite different from 401(k)s.
When companies launch an ESOP, they form a trust that purchases some or all of the company’s shares and holds these in retirement accounts for employees. When the stock value increases or decreases, so does the value of employees’ accounts.
ESOPs have a unique structure (there is no truly comparable plan anywhere, in any country) that enables them to provide unique benefits to the people and institutions listed below.
(Note: Not all benefits are available in all situations.)