DEFINITION of 'KSOP'

A qualified retirement plan that combines an employee's stock ownership plan (ESOP) with a 401(k). Under this type of retirement plan the company will match employee contributions with stock rather than cash. KSOPs benefit companies by reducing expenses that would arise by separately operating an ESOP and 401(k) retirement plans.

BREAKING DOWN 'KSOP'

Using a KSOP is a great option for companies when their shareholders are looking to sell their shares in the company. The KSOP instantly creates a market with sufficient liquidity that is needed for those shareholders wishing to sell their stake. KSOPs also provide added motivation to employees to ensure the profitability of the company. This is because the added profitability would directly enhance their retirement plans.

RELATED TERMS
  1. Employee Stock Ownership Plan - ...

    A qualified, defined contribution, employee benefit (ERISA) plan ...
  2. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  3. Corporate Pension Plan

    A formal arrangement between a company and its employees - or ...
  4. Auto Enrollment Plan

    An employer’s decision to sign employees up to have a percentage ...
  5. Thrift Savings Plan - TSP

    A retirement savings plan created by the Federal Employee's Retirement ...
  6. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
Related Articles
  1. Small Business

    Is An ESOP Right For Your Business?

    Discover how to transfer your company's net worth to the next generation of entrepreneurs.
  2. Financial Advisor

    Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.
  3. Investing

    A Beginner's Guide to Investing in Company Stock Plans

    There are certain advantages to investing in your employer's stock but there are some potential drawbacks to be aware of.
  4. Financial Advisor

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  5. Retirement

    This Is Why Your Employer Should Offer a 401(k)

    Understand the unique benefits that come with a small business offering a retirement savings plan such as a 401(k) to current and future employees.
  6. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  7. Financial Advisor

    Which 401(k) Plan is Right for You?

    An overview of the different types of 401(k) plans and how to choose the right one.
  8. Retirement

    The Basics Of A 401(k) Retirement Plan

    This plan has become one of the most popular retirement options. Find out why.
  9. Financial Advisor

    The 401(k) and Qualified Plans Tutorial

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  10. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
RELATED FAQS
  1. Is an ESOP a qualified retirement plan?

    Acting as a qualified stock bonus plan as well as a form of a retirement plan, an ESOP has been a qualified retirement plan ... Read Answer >>
  2. I have a KSOP through my employer that I've invested 100% in company stock. I am ...

    In order to be sure of your options, it's best to check the summary plan description (SPD) for the plan. The options may ... Read Answer >>
  3. How does an employer benefit from a 401(k) matching plan?

    A 401(k) is a type of qualified retirement plan created by employers, where an employee deposits money into a retirement ... Read Answer >>
  4. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ... Read Answer >>
  5. What is the difference between a 401(k) plan and a 457 plan?

    Discover how 401(k) plans are privately offered employee retirement plans, while 457 plans are typically available to public ... Read Answer >>
  6. Is a 401(k) a qualified retirement plan?

    Examine the different types of qualified retirement plans, and discover if a 401(k) meets the definition of a qualified retirement ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center