What is a reason for the popularity of employee stock ownership plans (ESOPs)?
A) ESOPs provide tax advantages to employers.
B) ESOPs provide very high risk-free retirement income.
C) Employees can use ESOPs to buy their company during financial crises.
D) ESOPs must invest at least 51 percent of their assets in the company's own stocks.
E) The employees are provided with many more shares of stock than they actually own.

Question

Quizplus · Accepted Answer

ESOPs provide tax advantages to employers, which is a reason for their popularity. Employers can deduct contributions made to ESOPs from their taxable income, and contributions are not subject to certain taxes like Social Security and Medicare taxes. This can result in significant savings for employers.

What Is a Reason for the Popularity of Employee Stock