Question

An advantage of an employee stock ownership plan (ESOP) is that

a.) It allows the trust to use borrowed money to buy shares from a principal shareholder.
b.) It allows the owners to increase the umber of shares they own in the company.
c.) Employees are never taxed on their shares in the company.
d.) It encourages early retirement among rank and file employees.

Answer 1

An advantage of an employee stock ownership plan (ESOP) is that it encourages early retirement among rank and file employees by providing an avenue for employees to accumulate wealth through company ownership and make retirement more accessible.

Step-by-step explanation:

An advantage of an employee stock ownership plan (ESOP) is that it encourages early retirement among rank and file employees. ESOPs are retirement plans that allow employees to become partial owners of the company they work for through the purchase of company stock. As employees accumulate shares of company stock in their ESOP accounts over time, they have a financial incentive to retire early so they can sell their shares and benefit from the value appreciation.

By retiring early and selling their shares, employees can potentially enjoy a higher return on investment and financial security in retirement. However, it should be noted that early retirement is a personal choice and not directly enforced by the ESOP. The ESOP simply provides an avenue for employees to accumulate wealth through company ownership and make retirement more accessible.