Does anyone have any advice on ESOPs?

This may not apply to all companies, but our ESOP is made up of company stock where the company match is parked. Once it's there though, I can move it around to any of the offered funds in the 401k. However, I just usually leave it there for awhile. There are no additional vesting restrictions that are not already part of the overall 401k.

It's most certainly wise for you to ask to see a plan description. You'd want to know what you're getting into, whether it's an ESOP or any other type of investment.

At the very least, in addition to any vesting requirements (since you'd be a new hire), you'd want to know what rules are in place regarding share sales and how long you may be required to hold the shares prior to selling. You'd also want to know what sort of discount to the current trade price you'd getting (if any) and how that is calculated.

Apart from 401k plan matches, some companies allocate shares into an ESOP as part of a bonus or gain/profit sharing plan. Others allow employees to purchase shares at a discount. Some allow employees to purchase shares for cash or "on credit" at the discounted price, and let you keep the quarterly dividends and interest from the loan.

They come in a variety of flavors. Read, ask and then read some more.

Can you elaborate more on sale shares? Would this only be in the event employment is terminated?

Thank you for the info and questions to ask, I will be sure to keep your post in mind.

Also, I am fairly certain that the shares are allocated as bonuses/gifts but will find out. Is that generally regarded as a better deal than buying shares at a discount, etc?

Again, thank you

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By parked do you mean fixed?

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No, every week when my paycheck is deducted, the amount of company match just gets funneled to that fund. I can move it out anytime or leave it in since it's just company stock.

We have one at my employer and we are a privately held company. We still have a 401k and match, but our company started the ESOP two years ago. The company purchases the shares (the amount you get is based on your annual salary), we cannot sell them, but after 6 years (from plan implementation) you are 100% vested. If you leave after being fully vested, they will pay out your shares in 3 annual payments. We get a quarterly shares report that shows the prices per share. On my statement for 2015 year which was year one, my total amount of shares was a little over $4,000 and I should have the same of similar amount added for last year depending on share evaluation.

Curious if the 6 year gradual vested option or 3 year cliff is more ideal for an employee. Any idea?

I may be mistaken, but pretty sure retirement is an automatic vesting event.

I don't believe it is with an ESOP or at least not the one that my company has set up. I am not an expert by any means this is just the information I remember from the Webinars and Seminars I attended when my company started it.

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ur ESOP puts in 25% of your annual earnings into your acct and on average goes up 10-14% a year

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Wow

That sounds almost too good to be true

Sure. There may be rules regarding how long you have to hold the shares before selling. In the last one that I was in, the employees bought shares (in one transaction - everyone got the same entry price) at a discount of 20% (as best I recall). But you had to hold the shares for a minimum of 2 years. If you'd bought on credit (paid off by payroll deductions), the loan would be structured to be paid off within that 2 year period, or you could pay it off sooner. The interest on the loan went back into your account, as well as any dividends that had been paid. If your employment ceased prior to that, for whatever reason, enough shares would be sold to pay off the loan, or you could make a lump sum payment. At that point, whatever free & clear shares you owned would be transferred to you. If you were still an employee at the end of 2 years, you could sell some or all at the current market price, or continue to hold the shares. This plan was open to anyone who had at least one year of employment service.

The company that I'm with now doesn't have a standalone ESOP plan. They simply pay the company match to participants in the 401k plan in company shares. That plan has a 3 year vesting schedule (33.3% a year - sales are restricted based on that vesting schedule). Those shares are held within the 401k plan. You can sell them whenever you want, but the proceeds stay within the 401k and remain tax advantaged.

A friend of mine's sister is in a totally different type of plan, that's totally unrelated to her 401k. Her company pays out bonuses in company shares and she can sell them (or keep them) as soon as they hit her account. She contributes nothing to that plan. I'm not sure if she can buy more shares on her own on top of that or not. I don't know what the tax implications are for her.

As you can see from the replies here, ESOPs come in a great many flavors. That's why you want to carefully read through and understand what your company is offering and what unique features it may have. And over time, you want to make sure that your portfolio doesn't become overweight in company stock. To me, that's probably the greatest risk with long term ESOP participation. Stocks go up & down over time, so you don't want events at the company to affect your financial health too greatly. I know some executives who have been with their companies for years, and their company stock makes up the majority of their liquid net worth. Unless you're in the C suite, to me, that's playing with fire.

Best of luck with your new position.