Can an LLC establish an ESOP?
I have been getting asked this question frequently so I thought I would address it here.
An LLC cannot sponsor an ESOP. The reason lies is the definition of qualified employer securities. Such definition requires that an ESOP be invested in stock issued by the employer. Ownership units in an LLC do not constitute stock.
Thus, an LLC would need to convert to either an S corporation or a C corporation to be able to implement an ESOP.


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