PLANSPONSOR - June - July 2022 - 10

UPFRONT
The Benefits of S ESOPs
ACCORDING to research, employeeowners
of S corporations have a retirement-readiness
advantage over their
401(k) plan counterparts. Jerry Ripperger,
national vice president of stock plan
services consulting at Principal Financial
Group, explains that workers' retirement
readiness is greater when they are in S
corporation employee stock ownership
plans, because participants build equity
in the company they work for. S ESOPs
promote broad company ownership,
which " is a good public goal " with greater
opportunities for employees to fund their
retirement, he says.
" It's a way to share wealth across all
those who are generating wealth on behalf
of the organization, " Ripperger says. " I
can't control how Amazon does, or Google,
but I can control-to some degree-how
the company I work for does. It creates a
line of sight and this ability to influence
those results and reap the benefits. "
ESOPs offered by S corporations are
tax-deferred defined contribution plans.
S ESOPs allow companies to provide
compensation to employees through
ownership interest in the company, like
ESOP plans from C corporations.
Among employers with an S ESOP
retirement plan option, 57% offer it in
addition to a pension or defined contribution
plan, according to research released
in April from Ernst & Young.
The report, " Contribution of S ESOPs
to Participants' Retirement Security and
Employee-Owner Benefits, " prepared for
the Employee-owned S Corporations of
America-or
ESCA-analyzed
trends
in S ESOP retirement plans from 2002
through 2019. Included were S ESOPs'
net asset value, number of participants,
average account balances and distributions
to participants. The research also estimated
benefits that accrue to employeeowners
working for an S ESOP firm.
According to the research, S ESOPs
distribute 25% more per participant than
do 401(k) plans, on average.
Ernst & Young also found that the
average total cumulative return per participant
for S ESOPs from 2002 through
10 PLANSPONSOR.COM June - July 2022 Art by Klaas Verplancke
" ... 57% offer
it in addition
to a pension
or defined
contribution
plan ... "
2019 was over $300,000, for a compound
annual growth rate of 12.1%-one-third
higher than the returns from the S&P
500 over that time, when the S&P 500
Total Returns index grew at a compound
annual rate of approximately 9%.
Further, from 2002 through
2019, S ESOP participants received an
annual average of $5,900, while 401(k)
plans distributed an annual average of
$4,700,
the research showed. After the
Great Recession, S ESOP participants
received an annual average of $6,700,
while 401(k) plans distributed an annual
average of $5,400; S ESOPs distributed
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PLANSPONSOR - June - July 2022

Table of Contents for the Digital Edition of PLANSPONSOR - June - July 2022

INSIGHTS
RULES & REGULATIONS
UPFRONT
2022 Plan Sponsor of the Year Winners
By Extension
Talent Management
The Best Line of Defense
Under-the-Radar Plan Errors
FIDUCIARY FORUM
INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover1
PLANSPONSOR - June - July 2022 - Cover2
PLANSPONSOR - June - July 2022 - 1
PLANSPONSOR - June - July 2022 - INSIGHTS
PLANSPONSOR - June - July 2022 - 3
PLANSPONSOR - June - July 2022 - RULES & REGULATIONS
PLANSPONSOR - June - July 2022 - 5
PLANSPONSOR - June - July 2022 - 6
PLANSPONSOR - June - July 2022 - 7
PLANSPONSOR - June - July 2022 - UPFRONT
PLANSPONSOR - June - July 2022 - 9
PLANSPONSOR - June - July 2022 - 10
PLANSPONSOR - June - July 2022 - 11
PLANSPONSOR - June - July 2022 - 12
PLANSPONSOR - June - July 2022 - 13
PLANSPONSOR - June - July 2022 - 2022 Plan Sponsor of the Year Winners
PLANSPONSOR - June - July 2022 - 15
PLANSPONSOR - June - July 2022 - 16
PLANSPONSOR - June - July 2022 - 17
PLANSPONSOR - June - July 2022 - 18
PLANSPONSOR - June - July 2022 - 19
PLANSPONSOR - June - July 2022 - 20
PLANSPONSOR - June - July 2022 - 21
PLANSPONSOR - June - July 2022 - 22
PLANSPONSOR - June - July 2022 - 23
PLANSPONSOR - June - July 2022 - 24
PLANSPONSOR - June - July 2022 - 25
PLANSPONSOR - June - July 2022 - 26
PLANSPONSOR - June - July 2022 - 27
PLANSPONSOR - June - July 2022 - By Extension
PLANSPONSOR - June - July 2022 - 29
PLANSPONSOR - June - July 2022 - 30
PLANSPONSOR - June - July 2022 - 31
PLANSPONSOR - June - July 2022 - Talent Management
PLANSPONSOR - June - July 2022 - 33
PLANSPONSOR - June - July 2022 - The Best Line of Defense
PLANSPONSOR - June - July 2022 - 35
PLANSPONSOR - June - July 2022 - Under-the-Radar Plan Errors
PLANSPONSOR - June - July 2022 - 37
PLANSPONSOR - June - July 2022 - FIDUCIARY FORUM
PLANSPONSOR - June - July 2022 - 39
PLANSPONSOR - June - July 2022 - INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover3
PLANSPONSOR - June - July 2022 - Cover4
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