The House Education & Workforce Committee passed three key pieces of pro ESOP legislation in a major sign of progress for The ESOP Association member's policy priorities. The Retire Through Ownership Act passed the Committee unanimously, while both the EBSA Investigations Transparency Act and the Balance the Scales Act passed by votes of 19-16. Together, these bills aim to bring long sought clarity, accountability, and fairness to ESOP regulations and oversight.
Legislation Overview
• Retire Through Ownership Act (H.R. 5169). This legislation establishes a clear regulatory pathway for forming new ESOPs by clarifying “adequate consideration.” It allows ESOP fiduciaries to rely in good faith on independent, professional appraisers using the longstanding IRS Revenue Ruling 59 60. Establishing a widely accepted valuation standard in statute (an ESOP policy priority for over 50 years) will make huge strides in alleviating the chilling effect on new ESOP formations
• EBSA Investigations Transparency Act (H.R. 2869). This bill shines light on the Department of Labor’s Employee Benefits Security Administration (EBSA) lengthy investigations by requiring an annual report to Congress detailing open investigations and their resolution. This transparency will help curb open-ended investigations that can cost employee owners millions of dollars and unnecessary stress on their businesses.
• Balance the Scales Act (H.R. 2958). This bill requires EBSA to disclose any “common interest” agreements to Congress and to defendants. These secret arrangements have allowed EBSA to share information found in investigations with private plaintiff's attorneys, eroding due process of the law. By surfacing these arrangements, plan sponsors and fiduciaries can better understand the playing field and appropriately defend themselves.
How We Got Here
These votes are the product of sustained advocacy by The ESOP Association (TEA) and its members across the country. In January and May, TEA members flew to Washington, D.C., meeting face to face with their Members of Congress to advocate for the policy priorities outlined in these bills. Throughout the year, ESOP Ambassadors have hosted Members at their facilities so they can see for themselves how ESOP culture strengthens workers, businesses, and local communities.
TEA President and CEO James Bonham and the TEA Government Affairs team reinforced our member's efforts by connecting with key leaders in Congress and the Administration throughout the year. Bonham met directly with Labor Secretary Lori Chavez-DeRemer who showed her support for pro-ESOP policies while speaking at TEA's National Conference in May. Bonham advocated for the pro-ESOP bills while testifying before the House Education & Workforce Committee to detail the chilling effect of prolonged EBSA investigations, the unfairness of regulation by litigation, and the costly uncertainty created by the lack of clear valuation standards. Most recently, TEA worked closely with Rep. Rick Allen to author the House version of the Retire Through Ownership Act, which also garnered unanimous support in the Senate HELP Committee.
What’s Next
This momentum is encouraging, but we're not finished yet. Our sights are now set on passing this bipartisan legislation in both chambers and getting them signed into law. To finish the job, we’ll need the continued engagement of ESOP champions nationwide. That means staying active, sharing your ESOP story with your Members of Congress, and responding quickly as key votes are scheduled.
TEA will continue to provide real time updates as legislation moves through Congress, along with tools to make outreach easy and effective.
