[Summary] Employee Stock Ownership Plans (ESOPs) are defined contribution plans primarily invested in the employer's securities. Employee stock plans in the form of an ESOP pre-date the 1974 Employee Retirement Income Security Act (ERISA). ERISA,however, was the first law to recognize ESOPs. Congress has routinely revisited ESOPs and amended the IRC to reflect policy. The 1975 Tax Reduction Act created a tax credit for ESOPs. The Revenue Act of 1978 added new formalities to ESOPs through creation of IRC § 409 A. In the mid-1980s, the 1984 Tax Reform Act created new and substantial tax incentives for employers maintaining ESOPs for employees. Two years later, the 1986 Tax Reform Act emphasized the retirement objective of ESOPs by imposing a 10% penalty tax on withdrawals made prior to age 59.5. The Omnibus Budget Reconciliation Act of 1989, however, repealed or limited multiple ESOP tax incentives. The Small Business Job Protection Act (SBJPA) of 1996 widened the availability of ESOPs by allowing S corporation shareholders to participate. To prevent abuse of S corporation ESOPs, the Economic Growth and Tax Relief Reconciliation of 2001 Act initiated a 50% excise tax on prohibited allocations by S corporation ESOPs. Finally, the Job Creation and Worker Assistance Act of 2002 increased the contribution limits of many qualified retirement plans, including ESOPs.