Applications Open for NJ ESOP Assistance Program

The New Jersey Economic Development Authority announced that, since May 5, it has been accepting applications for its Employee Stock Ownership Plan Assistance Program, which it created earlier this year. The $2.7 million initiative will provide partially covered ESOP feasibility study services to New Jersey businesses that have at least 20 full-time employees and are interested in transitioning to employee-owned retirement plan models.

ESOPs have recently caught Congress’s attention: Two bills were introduced in May to strengthen stock ownership plans and encourage employees to invest more in their companies’ stock. ESOPs are retirement plans in which employees may become owners of the company they work for, with assets held in employer stock units.

The NJEDA is partnering with Onyx Partners Group and Lazear Capital Partners—firms experienced in ESOP transitions—to consult for businesses interested in participating. In July 2024, the NJEDA entered into an agreement with the Rutgers University School of Management and Labor Relations to provide educational materials about ownership to the public.

“By expanding ESOPs, the NJEDA aims to create life-changing economic opportunities for workers and their families while supporting sustainable business transition plans, strengthening communities and businesses across the state,” said NJEDA CEO Tim Sullivan in a statement.

According to the NJEDA’s website, businesses, owners and employees should consider the following when seeking feasibility study services and, ultimately, an ESOP transition:

• Is the current owner seeking a cost-effective means of retirement and/or succession planning?
• Does the business currently employ at least 20 full-time employees?
• Is the business structure stable and sustainable in terms of revenue and governance? and
• Is the business seeking to provide additional benefits for their employee?

New Jersey had almost 90 ESOPs with nearly $65 billion in plan assets covering more than 423,000 employees and retirees, as of April, according to an NJEDA statement.