Burns & McDonnell ESOP and 401k Plan: A Retirement Guide for Employee-Owners
If you work at Burns & McDonnell, roughly 70% of your retirement savings is probably held in one privately traded stock. You cannot sell it on an exchange, look up its price, or hedge it. Employee ownership has built substantial wealth for people at the firm. It also creates a planning problem that general retirement advice does not address.
In this guide
- What the plans' public filings report
- How the ESOP contribution and annual share valuation work
- When you are first allowed to diversify, and how much
- Five decisions worth getting right before you retire
- Answers to the questions employee-owners ask most
The Burns & McDonnell retirement plans, by the numbers
Burns & McDonnell has been 100% employee-owned since 1986. The National Center for Employee Ownership ranks it the ninth-largest employee-owned company in the United States, with about 12,000 employees. Two plans hold the retirement money: the Employee Stock Ownership Plan and the 401(k) Savings Plan.
Here is what each plan reported in its most recent public Form 5500 filing, for the 2024 plan year.
| 2024 plan year | ESOP | 401(k) Savings Plan |
|---|---|---|
| Total plan assets | $4.71 billion | $2.06 billion |
| Participants | 11,328 | 11,725 |
| Average account balance | $415,660 | $176,048 |
| Employer contribution per participant | $18,273 | $3,987 |
| Plan-level administrative expense ratio | 0.01% | 0.03% |
Source: Form 5500 annual reports for the 2024 plan year, compiled from public filings. Averages are plan-wide and are pulled upward by long-tenured employee-owners. They are not a target or a projection for any individual.
The employer contribution to the ESOP averaged more than four times the employer contribution to the 401(k). The average employee-owner's ESOP account holds about 70% of their combined balance across the two plans. Most of the planning below follows from that second figure.
How the Burns & McDonnell ESOP works
Burns & McDonnell describes the mechanics plainly in its own benefits materials.
- Enrollment is automatic and costs you nothing. You do not elect into it and you do not contribute out of pocket.
- The company makes a cash contribution at year-end, allocated among eligible employee-owners.
- That cash buys shares at fair market value, assessed once a year by independent appraisal rather than by a public market.
- Your account grows three ways: annual contributions, share appreciation, and dividend payments.
The annual valuation matters more than most people expect. There is no live price. Your account is repriced once a year, so the timing of your separation from service relative to the valuation date can change the price at which your shares are bought back. Setting a retirement date around the valuation cycle is a real planning decision for ESOP participants.
Your Burns & McDonnell 401(k) is where the diversifying happens
The ESOP holds one concentrated position by design, so the 401(k) carries most of the real diversification. Three things to check.
- The plan reports automatic enrollment with a default investment for participants who never make an election. If you have never changed the default you were enrolled into, your allocation was chosen by the plan. That is worth an hour of your time.
- The plan-level administrative expense ratio is 0.03%, which is low. Fund-level expense ratios apply on top of it, so check your specific holdings.
- For 2026 the IRS elective deferral limit is $24,500. Catch-up is $8,000 at age 50 and over. A larger catch-up of $11,250 applies at ages 60 through 63 under SECURE 2.0, which allows $35,750 in total during those four years.
Worth checking for 2026: under SECURE 2.0, higher-earning participants must now make catch-up contributions on a Roth basis instead of pre-tax. The threshold is indexed and based on your prior-year wages from the employer. If you are over 50 and earning above it, confirm how your election is being coded. This changes the tax treatment of the contribution while the dollar amount stays the same.
The concentration question
Employee ownership at Burns & McDonnell has worked. The company's materials cite research showing ESOP participants hold higher retirement savings than non-ESOP participants, and the balances in the filings above are consistent with that. Standard advice to sell company stock as soon as you can is often wrong for participants at a strong ESOP firm.
Concentration is a risk you are being paid to take, and at some point the payment stops being worth it. That point usually arrives when three things are true at once: the ESOP balance is large in absolute terms, the remaining earning years are short, and your income depends on the same company. A 58-year-old department manager with $900,000 in the ESOP is exposed to Burns & McDonnell twice over, through the account and through the paycheck that funds everything else.
Private-company ESOPs carry one further consideration. Your shares are eventually repurchased by the company, so the value of your account and the company's ability to pay you for it draw on the same balance sheet. Public filings identify the plan as a leveraged ESOP, which is standard structure for a mature plan. It is still a reason to think about your own liquidity timeline early rather than assume it will always be someone else's problem.
When can you diversify your Burns & McDonnell ESOP?
Federal law sets a floor. Under Internal Revenue Code section 401(a)(28)(B), an ESOP must offer a diversification election to participants who have reached age 55 and completed at least 10 years of participation in the plan. Once you qualify, the election window runs for six years.
| Election year | Portion of your stock account you may diversify |
|---|---|
| Years 1–5 | Up to 25% of cumulative shares allocated to your account |
| Year 6 (final) | Up to 50%, also cumulative |
The cumulative math catches people out. Shares you diversified in a prior year are added back before the percentage is applied, then subtracted from the result. In practice you get less new room each year than the headline percentage suggests.
The election window is 90 days, and the plan then has its own 90 days to carry the election out. Share value at a private company is not known at year-end, so under IRS Revenue Procedure 2015-36 the plan may start your 90-day clock when the new valuation is communicated to participants rather than at the close of the plan year. Your window may not open when you expect it to. Watch for the notice and do not assume a January deadline. Miss it and you wait a year, with one fewer year left in a six-year runway.
A plan can satisfy the election in three ways: distribute the money to you directly, offer at least three alternative investment funds inside the ESOP, or transfer the amount into the 401(k) plan. Which one your plan uses changes the tax answer. A direct distribution you do not roll over is taxable, and may carry a penalty if you are under 59½. A transfer into the 401(k) is neither.
Plans may be more generous than the statutory floor, and some are. Your Summary Plan Description governs. Ask HR for the current version and read the diversification and distribution sections before you plan around anything here.
Five decisions worth getting right
1. Decide what your diversification election is actually buying.
Moving ESOP proceeds into a target-date fund may not reduce your risk much if the rest of your household balance sheet is already equity-heavy. Look at your total exposure once the ESOP is no longer 70% of it.
2. Ask whether net unrealized appreciation is available to you.
NUA can convert appreciation on employer stock from ordinary income into long-term capital gain, which can save a large amount of tax. It requires a lump-sum distribution of actual shares. Many ESOPs, particularly S-corporation ESOPs, distribute cash instead, and cash rules out NUA. Get a written answer from the plan administrator on whether an in-kind share distribution is available to you before you build a plan around it. Employee-owners assume this strategy exists more often than it does.
3. Map your tax brackets across the gap years.
Between your last paycheck and the start of Social Security and required minimum distributions, most retirees pass through several unusually low-income years. Roth conversions, capital-gain harvesting, and staged distributions do their best work in that window. A large ESOP distribution landing in the wrong year closes it, and can trigger an IRMAA Medicare surcharge two years later.
4. Coordinate the ESOP with the 401(k).
Treat the two plans as one portfolio. If the ESOP holds your growth exposure, the 401(k) may need to carry more fixed income than a standard age-based allocation would hold.
5. Check your beneficiary designations on both plans.
Beneficiary forms override your will. With an average ESOP balance above $400,000, a designation left over from a prior marriage is one of the more expensive mistakes available to you, and it takes ten minutes to fix.
Frequently asked questions
How much is Burns & McDonnell stock worth?
There is no public market price. The company is 100% employee-owned and privately held, so the share value is set by an independent appraisal performed once a year, and that valuation is what your account uses. Your annual statement is the authoritative number for your own account.
Do I have to contribute anything to get the ESOP?
No. Burns & McDonnell states that ESOP enrollment is automatic and costs employees nothing. The company makes a cash contribution at year-end that is allocated to eligible employee-owners. The 401(k) is separate and does require your own deferrals to capture the employer contribution.
Can I cash out my ESOP before age 55?
The statutory diversification right does not begin until age 55 with 10 years of participation. Distributions on separation from service follow a different set of plan rules and timelines. Distributions before age 59½ are generally subject to income tax plus a 10% early distribution penalty unless an exception applies. Your SPD sets the specifics.
What happens to my ESOP if I leave Burns & McDonnell before retirement?
Your vested balance stays yours. ESOP distributions often begin later and are paid over a longer schedule than a 401(k) rollover would be, sometimes in installments across several years and sometimes after a waiting period. If you are weighing an offer from another firm, put the distribution schedule in the comparison alongside salary.
Should I roll my ESOP into an IRA?
It depends on your situation. A rollover preserves tax deferral and opens the full investable universe. It also permanently forfeits any NUA opportunity on shares distributed in kind, and may change your creditor protection and your access before 59½. Run the comparison before the distribution is processed, because several of these choices cannot be undone.
Talk it through with someone who has seen this plan before
Proper Planning & Wealth Management works with engineers, project managers, and executives whose largest asset is stock in the company they work for. We will read your Summary Plan Description with you, model your diversification window, and tell you whether NUA is available in your situation.
Important disclosures. Proper Planning & Wealth Management is not affiliated with, endorsed by, or sponsored by Burns & McDonnell Engineering Company, Inc. All company and plan names are used for identification purposes only and remain the property of their respective owners.
Plan figures cited are drawn from publicly available Form 5500 annual reports for the 2024 plan year and from Burns & McDonnell's published careers and benefits materials, current as of the date of publication. Plan provisions change. The Summary Plan Description and the plan administrator are the controlling authorities for your benefits.
This material is for general educational purposes only. It is not individualized investment, tax, or legal advice, nor an offer or solicitation to buy or sell any security. Averages shown are plan-wide statistics, are not representative of any individual account, and are not a projection of future results. Diversification does not ensure a profit or protect against loss. Tax rules discussed, including net unrealized appreciation treatment and SECURE 2.0 provisions, are complex, fact-specific, and subject to change. Consult a qualified tax professional regarding your circumstances.