our ESOP story
Tom Sessa, founder of Sessa Sheet Metal, always wanted his company to be different in the way it treated its employees.
He valued each person, the meaning of a team of people and he knew that if people are treated fairly and given opportunities to shine, they work harder and have more pride in their work.
The establishment of the ESOP is a great way to give back to the employees and the employees can share in the monetary benefits of being employee owners. All contributions are made entirely by Sessa Sheet Metal. You never have to contribute a single penny…. leave that to us!
An ESOP is intended to be a long-term benefit. By operating as an ESOP, we are putting our money where our mouth is and proving to each of our employee owners that we care about you, both now and in the future. It’s free money for you! We hope this gives each employee owner a sense of pride and ownership in the work they accomplish each day.
For over 40 years, we’ve honored Tom Sessa’s vision to keep SSM’s focus on their most valuable asset… it’s employees. By functioning as an ESOP, our employee-owners are able to benefit directly as a result of their hard work and are able to truly own a part of this company built on the ethics that Tom holds close to his heart.
We sweat the small stuff, because the small stuff allows us to do the big stuff. We work hard, sending materials out to job sites in a timely manner and keeping our equipment and tools in good repair, smile when others walk by, and create an atmosphere that encourages collaboration and communication. It's all part of Sessa Sheet Metal way.
Our ESOP, unlike a publicly-traded company, is evaluated and appraised each year by an independent firm that works closely with our ESOP administrator. Each employee-owner gets an updated account balance statement annually.
We Sweat the Small Stuff
ESOP Nuts & Bolts
Must satisfy BOTH requirements:
• Completion of 1000 hours of service
• 18 years of age
Must satisfy BOTH requirements:
• Employed on the last day of the plan year (December 31st)
• Attained at least 1000 hours of service
• Discretionary and based on the company’s performance and profitablility.
Years of Service
Less than 2 years
2 years
3 years
4 years
5 years
6 yearsPercentage Vested
0%
20%
40%
60%
80%
100%Retirement age is NOT a must for the following situations:
• Distributions can be made is they have an account with less than $5000. They would get a lump sum distribution the year following termination. Must have terminated employee’s consent for a distribution.
From the SPD:
If you terminate employment for any other reason prior to your Normal Retirement Date and your account balance is over $1,000 and less than $5,000, you may elect to receive a “cash-out” distribution of your entire vested account balance in a lump sum by the close of the Plan Year following the Plan Year of your termination of employment.
• Distributions will be forced out for terminated employees with an account balance less than $1000. No consent is necessary.
From the SPD:
If you terminate employment for any other reason prior to your Normal Retirement Date and your account balance is $1,000 or less, you will receive a “cash-out” distribution of your entire vested account balance in a lump sum by the close of the Plan Year following the Plan Year of your termination of employment. No consent is needed.• Distributions for participants with an account balance over $5000 will have to wait until the 6th year after the year of termination to start installments over a 5 year period. The 1st installment is 20% of the vested balance. The 2nd installment is 25% of the vested balance. The 3rd installment is 1/3 of the vested balance. The 4th installment is 50% of the vested balance. The 5th installment is 100% of the vested balance.
From the SPD:
If you terminate employment for any other reason prior to your Normal Retirement Date, you may elect to begin to receive your vested account balance by the close of the sixth Plan Year following the Plan Year in which you terminate, or, if later, the close of the Plan Year in which the Company repays an outstanding acquisition loan in connection with your benefits.
Normal Retirement Age for the plan is the date of the participant’s 65th birthday.
7.03 Time of Distribution to Deceased or Disabled Participants Unless the Participant (or his or her Beneficiary) elects otherwise in writing, distribution of benefits to a Participant (or his or her Beneficiary) under the Plan shall commence no later than the last day of the Plan Year following the Plan Year in which a Participant suffers a Disability or dies while employed by the Company.
Ex: If an employee dies in 2018, the beneficiary would get paid out in 2019, based on the 2018 valuation and allocation. It’s the year following death or disability.The participant MUST be declared disabled by the Social Security Administration in order to get distributions under this pretense.
At age 55 and with 10 active years IN THE PLAN, not from the date of hire but from the date of entry into the ESOP, participants are offered 25% of their stock (in years 1-5) BUT what has already been taken gets subtracted out SO if the participant takes all 25% in year 1, they won’t have anything else to diversify until year 6. At that time, he can take another 25%. The idea behind diversification is not to “cash out” your retirement funds but rather to “diversify” or move it into any form of investment so your money isn’t all tied up in one place as you get closer to retirement age.
If the diversified money is “cashed out” the participant will pay penalties and taxes at the time of diversification.
Year 1- diversify 25% of the total stock value of participant’s ESOP account
Year 2- diversify 25% of the value of new shares for this year only
Year 3- diversify 25% of the value of new shares for this year only
Year 4- diversify 25% of the value of new shares for this year only
Year 5- diversify 25% of the value of new shares for this year only
Year 6- diversify 25% of remaining total value of stock shares (25% of total value minus all previous shares diversified
ESOP Lingo
The ESOP might sound complicated, but it doesn’t have to be. Here’s a list of the commonly used ESOP terms and definitions broken down in easily understood terms. Let’s get started! (HOVER)
Allocation
Allocation
A distribution of equity in the ESOP pool among individual employees. Specifically, how much each employee will receive
Contribution
Contribution
Amount of money the company puts into the ESOP
Distribution
Distribution
Payout of the employee’s stock funds
Diversification
Diversification
After age 55, diversification allows employees to invest a portion of the ESOP funds into something other than company stock. Employees can also receive a direct distribution of their money.
Dividends
Dividends
Distributions of profits made by the company to its shareholders
Eligibility
Eligibility
Criteria that employees must meet to participate in the ESOP, based on employment length and a probationary period
Equity
Equity
Represents ownership in the company, providing potential growth and risk of loss if the company’s value fluctuates
ESOP
ESOP
Employee Stock Ownership Plan; an employee benefit plan that allocates stock shares to employees, as a retirement benefit. This allows employees to be part of the company profits.
Fair Market Value
Fair Market Value (FMV)
The value of the company’s stock
Valuation
Valuation
Used to calculate the price per share
Vesting
Allocation
How long you must work for the company for your stock funds to be non-forfeitable; the process by which an employee’s award becomes fully owned by the employee; credit for service
You will be eligible to once you have worked at least 1000 hours. We have two entry dates, January 1 and July 1, whichever occurs first. You must be at least 19 years old.
If you leave the company before you are fully vested, you are entitled to a portion of your ESOP balance. For a full vesting schedule, refer to you summary plan description or contact the plan administrator for more information.
When you take your money out of your ESOP account, it will be taxed. As with any retirement savings, taking it out in large quantities or a lump sum will result in more taxes owed. We encourage you to work with your tax counsel so that you are informed about taxes and retirement savings.
Sessa Sheet Metal does not pay taxes as a company. This is a major benefit of being an ESOP company. Instead, all of that money that would normally go to the IRS goes into the ESOP.
Yes. To avoid IRS penalties, withdrawing funds from your ESOP should not start before age 59 1/2.
You will receive annual statements in late Fall. Please keep in mind that statements are only issued once per year.
You should receive your first statement approximately 1.5 years after your date of hire.
Starting at age 55, participants that have at least 10 years in the ESOP may roll over up to 25% during the next 5 years. At age 60, they may withdraw an additional 25%, for combined total of 50%.
Fluctuations are inherent in our business and are accounted for in our valuation process. If we were to experience consecutive years of losses, our share value would probably stop growing and may even decline slightly. We may not contribute as much or even at all to the ESOP during those years. Balances would remain the same or go down slightly for a period until profitability returned. It's important to keep a long-term mentality. Though we may experience some years that don't perform as well as others, the outlook of our ESOP over the life of your career is very positive.
We are not a publicly traded company.
After employment separation, in the Fall of the following year, Menk & Associates (our third party administrator) will reach out to discuss distribution options:
Option #1: Cash out your funds
Option #2: Roll funds into 401(k), IRA, or other approved retirement accounts
Cash in the ESOP refers to your portion of the available cash within the Employee Stock Ownership Plan. This is not cash that can be accessed by you, rather, it represents the cash that is used to purchase stocks as a part of the ESOP's investment activity throughout the year.
There are several factors that play into share value growth. Most of the share value is determined by our expected future Profitability. For the share value to grow we need to be profitable and growing. There are also external factors that impact our share growth. The valuation done every year is a 150-page book evaluating all the different factors that impact our businesses value.
All ESOP beneficiary change forms are handled by Shirley Laney, our HR Manager. She can be reached at 410-327-7000 x1010 or hr@sessasheetmetal.com
If you were a participant in the plan when you left, you will be a participant in the plan on the date you complete one hour of service after your re-employment. If you were not a participant in the plan when you left, you must satisfy the eligibility requirements before you can participate.
Frequently Asked Questions
Questions or Feedback About our ESOP?
When Do You
Enter The ESOP?
Employee owners will be automatically added to the ESOP once they have worked 1000 hours. We have two entry dates, January 1 and July 1.
