Guest Blog: State of Iowa is a leader in ESOP-friendly policy

By Jerry Ripperger, Principal Financial Group®

If you are a business owner who wants liquidity, or is looking to transition to retirement, you need to be aware of an innovative, nationally recognized program run by the Iowa Economic Development Authority (IEDA). It’s called the Employee Stock Ownership Plan (ESOP) Formation Assistance Program, and it can make creating an ESOP substantially more affordable.

An ESOP is a financial instrument that allows employees to buy part or all of their company through a trust fund. In return, the business owner gets liquidity for his or her company shares without selling to an outside investor.

Here’s how the program works:

  1. Businesses interested in creating an ESOP apply to the IEDA
  2. An IEDA panel and the IEDA director review the application
  3. If approved, the IEDA reimburses up to 50 percent of the costs the business incurs to obtain an ESOP feasibility study – up to $25,000

In addition to keeping ownership within the company, there are numerous tax benefits for setting up an ESOP. For example, if the business owner sells at least 30 percent of the company to the ESOP, he or she receives a 50 percent reduction in state capital gains taxes on the transaction.*

ESOPs can be a great method for business owners at virtually any stage in their careers to gain liquidity. ESOPs can be arranged at companies that are public or private, large or small. Principal Financial Group, my employer, created the below video to educate business owners about ESOPs. Watch it for more information on how ESOPs work, and why business owners use them.

Few states have anything like Iowa’s ESOP Formation Assistance Program. To learn more, visit the above link or contact IEDA at opportunities@iowa.gov.

Jerry Ripperger is vice president of consulting at Principal Financial Group and a Princor Registered Representative.

*Based on current state laws.
The subject matter in this communication is provided with the understanding that Principal® is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.
©2016 Principal Financial Services, Inc.
t16081603a0 – 8/2016

Back to School: Iowa’s public universities are research powerhouses

Fall classes begin this week, bringing around 80,000 undergrad, graduate and professional students to Iowa’s three public universities: Iowa State University, the University of Iowa and the University of Northern Iowa. That’s 80,000 skilled workers right here in Iowa.

Clockwise from left: Iowa State University in Ames; University of Northern Iowa in Cedar Falls; and the University of Iowa in Iowa City
Clockwise from left: Iowa State University in Ames; University of Northern Iowa in Cedar Falls; and the University of Iowa in Iowa City

Iowa’s public universities are also major research institutions. Together they invest more than $774 million in research annually. Iowa is one of just seven states (and one of three in the Midwest) with multiple public universities that are members of the Association of American Universities (AAU). The AAU is an association of 62 universities in the U.S. and Canada whose members are the top research institutions in both countries.

Our universities’ excellence in research leads to the creation of innovative new businesses and offers the potential for public/private partnerships.

The Iowa Economic Development Authority (IEDA) can assist companies that want to partner with Iowa’s public universities on research. Let IEDA help your company make use of public research infrastructure or commercialize technology developed at Iowa’s public universities. To learn more, contact IEDA at opportunities@iowa.gov.

Iowa helps businesses better move goods

The Iowa Economic Development Authority (IEDA) is working closely with the Iowa Department of Transportation (Iowa DOT) on freight modeling to benefit companies.

Here’s Iowa DOT Director Paul Trombino III discussing how freight optimization helps Iowa businesses:

While other states scramble to fulfill the needs of today, Iowa is planning for the future. Talk with the Iowa Economic Development Authority today about how an Iowa location could help your company reduce freight costs by emailing us at opportunities@iowa.gov.

Additionally, check out the recently published Iowa State Freight Plan to learn more about the state of Iowa’s freight transportation infrastructure.