FOR IMMEDIATE RELEASE
October 10, 2025
Contact:
Demetrios Karoutsos
dkaroutsos@esopassociation.org
ESOP Association Legislative Priorities Unanimously Passed by Full U.S. Senate
Bills Will Provide Long-Sought Regulatory Clarity and a Voice for ESOPs Within Department of Labor
Washington, D.C. – On October 9, the United States Senate unanimously passed two major legislative priorities of The ESOP Association. The Retire Through Ownership Act (S. 2403) provides a legislative remedy to help address decades of regulatory ambiguity regarding ESOP valuations that has fueled an anti-ESOP bias at the DOL. The Employee Ownership Representation Act (S. 1728) adds employee ownership representation to the ERISA Advisory Council, creates a new Advisory Council on Employee Ownership at the DOL, and creates an Advocate for Employee Ownership within the DOL’s Employee Ownership Initiative. Both bills were passed unanimously by the Senate Health, Education, Labor & Pensions (HELP) Committee in July. The ESOP Association worked with Senators and committee staff on both bills and has strongly advocated for their passage.
“The Senate’s unanimous passage of the Retire Through Ownership Act is a landmark moment for ESOPs,” said James Bonham, President and CEO of The ESOP Association. “The Senate has spoken with one clear voice on legislation that will help eliminate regulatory uncertainty and ensure that ESOPs and trustees who follow clear rules will not be subject to needless litigation and harassment by the government and plaintiffs’ bar. Thank you to Senators Roger Marshall (R-KS), Tim Kaine (D-VA), Chairman Bill Cassidy (R-LA) and Ranking Member Bernie Sanders (I-VT), and the Senate leadership who were instrumental in passing this important bipartisan legislation.”
The House companion bill to the Retire Through Ownership Act, HR 5169, was unanimously passed by the Education & Workforce Committee in September.
“The Employee Ownership Representation Act will give ESOPs a much-needed seat at the table and a strong voice to advocate on behalf of ESOPs at the Department of Labor,” continued Bonham. “We are grateful to Chairman Cassidy and Ranking Member Sanders, along with all of the Senators on the HELP Committee, for being champions of employee ownership, and to the entire Senate for unanimous passage of both bills.”
The Senate remained in session since October 1 while leaders have attempted to negotiate an agreement to fund and reopen the federal government, and has been holding hearings and considering legislation as part of its normal course of business.
Retire Through Ownership Act (S. 2403)
The Retire Through Ownership Act, sponsored by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA) provides essential clarity on the issue of adequate consideration and will strengthen the foundation of employee ownership and ESOPs in America. The Retire Through Ownership Act would allow an ESOP plan fiduciary to rely in good faith on an independent professional expert business appraiser who utilizes the longstanding well-accepted valuation practices as described in IRS Revenue Ruling 59-60.
Without clear legislative or regulatory guidance, ESOP fiduciaries have been required to operate under a cloud of uncertainty and potential liability, even when they are acting prudently and in good faith by hiring qualified, independent business valuation experts. As this guidance is currently non-existent, this bill provides much needed clarity long sought by the ESOP community. The lack of guidance in this regard has led to lawsuits, audits and investigations by government and plaintiffs’ bar alike, which have directly contributed a “chilling effect” on ESOP formation.
IRS ruling 59-60 is well understood and broadly accepted and recognizes the myriad factors a professional business appraiser should consider in forming a valuation for closely held businesses. By properly aligning ERISA with long-existing valuation guidance, this legislation prevents the development of multiple competing, or even conflicting, processes or procedures within federal policy, thereby limiting the risk of conflicting interpretations by courts or regulators. For more than 60 years, both government officials and private sector business appraisers have successfully relied on the guidance of this IRS ruling.
Employee Ownership Representation Act (S. 1728)
The Employee Ownership Representation Act, sponsored by HELP Committee Chairman Bill Cassidy (R-LA), would add two representatives of employee ownership organizations to the ERISA Advisory Council at the Department of Labor. This long-overdue addition will ensure that the voices of America’s employee-owners are heard in the regulatory process governing retirement security. With more than 6,500 ESOPs across all 50 states affecting over 14 million people and representing nearly $2 trillion in wealth, the absence of employee ownership voices on the Council has left a glaring gap in both perspective and regulatory action at the Department. The bill also creates a new, seven-member Advisory Council on Employee Ownership at the DOL through an amendment offered by Ranking Member Bernie Sanders.
S. 1728 also incorporates the Advocate for Employee Ownership Act (S. 2474), sponsored by Senators Maggie Hassan (D-NH) and Steve Daines (R-MT). The bill authorizes the Secretary of Labor to appoint an Advocate for Employee Ownership within the existing Employee Ownership Initiative at the U.S. Department of Labor. The ESOP Association was the primary supporter of the bipartisan creation of the Employee Ownership Initiative at the Department, and this expansion will help further the initial goals of that Initiative.
