What is a KSOP?
Because a KSOP is a combination plan, it has features of both ESOPs and 401(k)s. KSOPs also indirectly create a marketplace for employees to sell their .
Most companies create KSOPs to provide the motivation, inspiration and retention associated with ownership. Like other , the ultimate benefit to the employee depends on the amount contributed and the performance of the in the . KSOP participants and sponsors can enjoy some unique tax advantages, but when KSOPs new shares, they can dilute existing shareholders.
How Does a KSOP Work?
An fund assets in the employer’s stock. The employer's contributions are usually in the form of stock options to purchase shares of the company. Typically, in a KSOP the employer matches any contributions that employees make to the plan with stock instead of cash. So, if John Doe $500 into his KSOP account and the company offers to match contributions, the employer $500 of stock into John's KSOP account.