Payroll Stock Ownership Plans Paysop

Definition of "Payroll stock ownership plans (paysop)"

Employee stock ownership plan (ESOP); trust (ESOP) under which an employer received tax credit instead of a tax deduction for contributions. Until passage of the tax reform act of 1986, the tax credit was limited to the lesser of the value of the stock contributed to the plan or .5% of the employer's payroll. The PAYSOP must have met all of the requirements of a qualified plan, and all participants must have had 100% immediate vesting. The Tax Reform Act of 1986 repealed PAYSOP.

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