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5500 Preparer's Manual for 2012 Plan Years

5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.

CCH® PENSION — 10/07/10

ESOPs Include More Company Contributions, Fewer Employee Contributions

from Spencer’s Benefits Reports: Companies with employee stock ownership plans (ESOPs) as their primary retirement plan contribute more to their plan, on average ($4,443), than non-ESOP companies contribute to their primary defined contribution plan ($2,533), according to the report, ESOPs as Retirement Benefits from the National Center for Employee Ownership and the Employee Ownership Foundation, Inc.

Employee contributions to an ESOP averaged only $384 compared to $2,848 to a defined contribution plan in non-ESOP companies. When company and employee contributions are combined, an average of $5,381 is contributed to non-ESOP companies per active employee versus $4,828 for ESOP companies.

Even though an ESOP is a defined contribution plan, 56% of the ESOP companies had a second defined contribution plan (usually a 401(k) plan), while only 3% of the non-ESOP companies had a second defined contribution plan. The report noted that “this disparity may result from the fact that the vast majority of defined contribution plans are 401(k) plans and relatively few companies offer more than one 401(k) plan.”

When a company has a second defined contribution plan, the combined employee and company contributions for an ESOP company averaged $5,611 per active participant compared to an average of $5,415 for the non-ESOP companies.

The average value of net plan assets per participant in only ESOPs is lower than the average value of net plan assets per participant in the primary defined contribution plan of non-ESOP companies ($47,556 for ESOP companies versus $50,149 for non-ESOP companies). The report noted that “this reflects in part the effect of ESOP loans, which directly reduce the current value of net plan assets, but which disappear over time.”

When the net plan assets for all the defined contribution plans that a company sponsors are taken into account, the average value of net plan assets per participant for all plans sponsored by an ESOP company is $55,836, compared to $50,525 for all plans sponsored by a non-ESOP company.

The data in the report was taken from the most recent Form 5500 filings (2007 or 2006, depending upon the company) involving 3,976 ESOP companies. The report also looked at data from 64,165 non-ESOP companies. The majority of the data came from companies with 20 to 1,000 employees. For more information, visit

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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