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Employee Stock Owners


As an active employee stock ownership plan (ESOP) participant nearing retirement, you may be pleasantly surprised by what you’ve accumulated during your years working as an employee owner. ESOPs are designed to be a long-term wealth building incentive, an extra employee benefit. This benefit is meant to motivate you to be productive and loyal. And, in turn, use your productivity to increase company profits. 

Peak Wealth Planning guides you through the diversification and distribution process.

We help you make good financial decisions that mitigates risk and minimizes your tax obligations. Diversification of your ESOP helps protect your retirement nest egg.

Protecting Your Nest Egg for Retirement
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Peak Wealth Planning
Peak Wealth Planning

Understand your ESOP Distribution & Diversification Schedule

The process of getting cash from your ESOP is called diversification if it happens while you are still working. It is called a distribution if you have left the company due to retirement. Typically, you will be eligible to diversify 25% of your company stock at age 55 and again at 60 with 10 or more years of ESOP participation. Your final 50% of company stock will be eligible for distribution over the 5 years following retirement.

Typical diversification and distribution schedule for employee owners. Your company's ESOP plan may be different.

Your company’s ESOP plan documents outline the rules for its unique milestones, and are available from your HR department.

Peak Wealth Planning will work with you and your company to help you make the best, most informed decisions when you are eligible to diversify and distribute your company shares.


The Employee Owner's Guidebook to Diversification & Retirement Planning

Covering decisions you'll make about your ESOP:

  • Whether to diversify
  • The impact on your taxes
  • How to create retirement income

What Risks Do ESOP Participants Face During Retirement Planning?

While ESOP participants receive many benefits, they also face several risks that can greatly impact your retirement income and lifestyle.

Avoid the Risk of Share Value Dropping Due to Poor Economy
Share Value Reduction

The value of your stock shares could decline if the company’s profits are down due to a poor economy or poor management.

Avoid the Risk of Wealth Locked within a Single Stock
Wealth Locked Within Company

A portion of your nest egg can only be sold back to the company. So if it is doing poorly, it may not have cash to buy your stock.

Avoid the Risk of a Double Whammy
Double Whammy if Company Fails

If your company fails, you may be looking for a job at the same time a portion of your nest egg has been wiped out.


Mitigate Risk with Portfolio Diversification

Participants in an employee stock ownership plan (ESOP) can diversify their investments to help avoid financial risks.

Protect your Retirement Nest Egg
Protects Retirement Nest Egg

Diversify your ESOP funds by transferring cash from stock sale into IRA or 401k reduces risks associated with concentrated stock.

Reinvest your Balance into an IRA
Reinvest Balance to IRA/401K

Transfer your ESOP balance into a diversified portfolio allows your funds to continue growing tax-deferred.

Generate Retirement Paycheck
Generate Retirement Paycheck

When properly reinvested into a 401k or IRA, your ESOP can generate a steady retirement paycheck to last a lifetime.

This is why it is important for ESOP participants to understand:

It is common for employee stock owners to build concentrated wealth with an individual company stock. But, it is prudent to migrate to a diversified investment portfolio with a mix of stocks and bonds to preserve your hard earned wealth.


Peak Wealth Planning has the expertise to diversify your company stock into an investment portfolio to meet your lifestyle needs.

It is common for employee stock owners to build concentrated wealth with an individual company stock. But, it is prudent to migrate to a diversified investment portfolio with a mix of stocks and bonds to preserve your hard earned wealth.

This is why it is important for ESOP participants to understand:


The unique milestones for diversification associated with your company stock plan.


What investment options are available such as stocks, bonds, mutual funds, and ETFs.


The proper asset allocation for your retirement goals.


The risks and rewards associated with investing to meet your retirement goals.

Peak Wealth Planning can create the right portfolio to meet your needs during your transition to retirement, and can manage the portfolio to distribute your retirement income each month or quarter.

Peak Wealth Planning

Take your Wealth Building to the Next Level


Planning for retirement is a journey, not a one time event. Your investments, goals, needs and timelines may change across time and with expected and unexpected life events. Which is why selecting a financial advisor that understands and can accommodate your current and future financial goals is important.


Peak Wealth Planning’s concierge services can help.

We advise our ESOP clients on:

  • What age can I comfortably retire?

  • When and how do I diversify my company stock?

  • What age is best to draw social security?

  • How can I minimize my tax obligations each year?

  • Should I take annuity in a single lump sum or turn it into a constant income stream?

  • How do I select my long term care policy benefit levels?

  • How do I plan for required minimum distributions (RMDs) from my IRA each year?

  • What do I need to consider when gifting home down payments, paying for college, and other gifts to my children and grandchildren?

Learn more about how Peak Wealth Planning can help you.


How Much Income Will Your Large ESOP Balance Generate?

An ESOP balance over $1 million could generate a huge portion of your retirement income.

Learn how with Peter Newman at his next scheduled event.
How far will your ESOP take you in retirement?
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