Following a sustained multi-year advocacy campaign led by The ESOP Association, the U.S. House of Representatives today passed S. 2403, the Retire Through Ownership Act, by a strong bipartisan vote of 401-14. The legislation, which passed the Senate unanimously in October 2025, now heads to President Trump for his signature.
The Retire Through Ownership Act would establish long-needed clarity around the process for determining the fair market value of privately held stock purchased or sold by an Employee Stock Ownership Plan. That process is fundamental to protecting the retirement savings of millions of American employee owners, and to remove a major impediment that has chilled ESOP formation for decades.
“At its core, the Retire Through Ownership Act is about protecting employee owners and their retirement security,” said James Bonham, President and CEO of The ESOP Association. “When an ESOP is formed, employees deserve confidence that the plan did not overpay for the owner’s shares. And when they retire or leave the company, they have the right to know their shares have been valued fairly. This legislation codifies well-known, existing processes for valuing a private company and makes it clear that an ESOP fiduciary may in good faith rely upon the work of an independent professional appraiser that follows those procedures. That is a huge roadblock for ESOP formation effectively removed and gives employee owners the confidence they deserve to know what their shares are worth every year.”
“The ESOP Association was proud to work closely with leaders from both parties to pass this vital legislation,” Bonham continued. “We are grateful to Speaker Johnson, Minority Leader Jeffries, Chairman Tim Walberg, Ranking Member Bobby Scott, Rep. Rick Allen, and every member who supported the Retire Through Ownership Act. Its passage demonstrates once again that ESOPs can unite Democrats and Republicans around strengthening retirement security and expanding economic opportunity for American workers. In particular, we want to thank Senator Roger Marshall and Senator Tim Kaine for introducing the bill, and their genuinely bipartisan work to get the job done for American working families.”
Under the Retire Through Ownership Act, an ESOP fiduciary may rely in good faith on a valuation provided by an independent professional valuation expert or business appraiser who uses the longstanding principles and methodologies described in IRS Revenue Ruling 59-60. The legislation does not diminish a fiduciary’s obligation to act prudently and solely in the interests of plan participants.
The price an ESOP pays for company stock has direct consequences for employee owners. Nobody wants the ESOP to overpay for shares, nor do employee owners want their shares to be undervalued when they retire. This is why ERISA’s fiduciary responsibility is process-based, and transparent, so ESOP plan beneficiaries can have confidence that the company has been valued fairly and according to well-established valuation principles and processes.
For decades, however, the Department of Labor has not issued regulations defining “adequate consideration” for privately held ESOP stock. In the absence of clear guidance, fiduciaries have faced uncertainty and potential liability even when they acted prudently and retained qualified, independent valuation professionals. The resulting litigation, investigations, and compliance costs have affected existing ESOPs and discouraged the creation of new ones, limiting opportunities for more American workers to build wealth through ESOPs.
IRS Revenue Ruling 59-60 provides a longstanding and broadly accepted framework for valuing closely held businesses. It identifies the range of factors a qualified appraiser should consider when determining fair market value. Aligning ERISA with these established valuation principles would create a more consistent process for fiduciaries, appraisers, regulators, and courts while preserving the fiduciary protections afforded to employee owners under federal law.
“Employee owners are the people this legislation is ultimately designed to protect,” said Derrick Vick, President of Freedom Industries Inc. and Chair of The ESOP Association’s Board of Directors. “They should be able to trust that the shares held for their benefit are valued through a fair, credible, and consistent process. The Retire Through Ownership Act strengthens that protection while making employee ownership a more viable succession option for business owners who want their employees to share in the value they helped create.”
“The Retire Through Ownership Act provides a common-sense solution to decades of uncertainty surrounding ESOP valuations,” said Ben Holder, CEO of Plastic Products, Inc. and Chair of The ESOP Association’s Public Policy Council. “By giving fiduciaries a clear process to follow while preserving their duty to act in the best interests of plan participants, this legislation will help protect employee owners from overpayment and undervaluation and give everyone involved a more predictable standard.”
S. 2403 was introduced by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA). The House companion legislation, H.R. 5169, was introduced by Representative Rick Allen (R-GA). Both measures received strong bipartisan support.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260916886257/en/
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