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February 23, 2009

KSOP

Your Guide

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Definition

An employer sponsored plan, which combines the features and benefits of an ESOP and a 401(k) plan. Employer contributions to a KSOP are usually made with employer stock options.

Referring Cite

IRC. § 401(k)(1), IRC § 404(k); IRC § 404(a)(9)

Additional Helpful Information

  • The nondiscrimination testing rules that apply to a 401(k) plan also apply to a KSOP
  • The eligibility requirements for qualified plans apply to KSOP
  • An ESOP can be an entire plan or it can be a component of a larger defined contribution
    plan. An ESOP may provide for different types of contributions. For example, an ESOP may
    include a qualified cash or deferred arrangement that permits employees to make elective
    deferrals. Such an ESOP design is sometimes referred to as a “KSOP

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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