ESOP Repurchase Liability Funding Gap Calculator

Quantify how far your ESOP repurchase reserve sits from upcoming obligations. Enter the projected liability, the cash already earmarked for payouts, and optionally the number of years and expected investment return to convert the gap into an annual contribution target.

Total benefit obligations expected to be paid out over the modeling horizon.
Cash or investments already earmarked for repurchase payouts.
Defaults to 5 years if left blank.
Defaults to 4.00% annual compound return when blank.

Coordinate funding decisions with your ESOP trustee, valuation advisor, and corporate finance team before executing.

Examples

  • $4,850,000 liability, $2,100,000 assets, 5-year horizon, 4.00% return ⇒ Funding gap $2,750,000.00 • Funded ratio 43.30% • Suggested annual contribution $493,315.55 • Monthly set-aside $41,109.63 • Projected reserves in year 5 $4,850,000.00.
  • $3,200,000 liability, $3,450,000 assets, defaults for horizon and return ⇒ Funding gap $0.00 • Funded ratio 107.81% • No additional contributions needed • Projected reserves in year 5 $4,195,079.21.

FAQ

How should I treat a line of credit dedicated to repurchases?

Add committed, unused credit capacity to the liquid assets input if your board approves drawing on it for ESOP redemptions.

Can I model annual benefit spikes from retiring cohorts?

Yes. Re-run the calculator with an updated liability figure for each forecast year and average the resulting contributions when building your capital plan.

What if I plan to dollar-cost average contributions monthly?

Use the monthly set-aside output as your target transfer; the tool assumes even deposits, so monthly pacing keeps the annual total intact.

Does the projected reserve value include distributions made along the way?

No. It assumes the full liability is funded at the horizon. Deduct actual payouts from assets as they occur and re-run the model to stay current.

Additional Information

  • Assumes contributions occur at the end of each year and compound at the stated reserve return.
  • Gap focuses on repurchase liability only—layer payroll, taxes, and administrative costs separately.
  • Funded ratio compares earmarked assets against the liability snapshot to signal whether a liquidity facility is needed.
  • Adjust the expected return to mirror the investment policy for ESOP reserves or corporate cash pools.

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