Legislation Will Provide Greater Regulatory Clarity for ESOPs, Curb Abuses at Dept. of Labor
The House Committee on Education & Workforce today passed three bills designed to provide increased transparency and regulatory clarity for ESOPs and rein in anti-ESOP bias at the Department of Labor’s Employee Benefits Security Administration (EBSA).
“Momentum for ESOPs in Congress continues to build, with legislation advancing in both the House and Senate to strengthen ESOPs and remove regulatory hurdles,” said James Bonham, President and CEO of The ESOP Association. “We are grateful for Chairman Walberg’s leadership and support for ESOPs in America, and will continue working closely with him and the Education & Workforce Committee staff to see these important bills signed into law.”
The following bills were passed by the committee today with strong support from The ESOP Association and its membership:
The Retire Through Ownership Act (HR 5169) was passed unanimously by the Committee. The legislation was introduced by Rep. Rick Allen (GA), a key subcommittee chairman, and would offer a clear regulatory pathway for new ESOPs on the issue of adequate consideration in the absence of guidance from the Department of Labor. The bill would allow an ESOP plan fiduciary to rely in good faith on an independent professional expert business appraiser who adheres to IRS Revenue Ruling 59-60, a longstanding and accepted ruling governing valuation practices. The companion bill in the U.S. Senate, S. 2403, was unanimously passed by the Health, Education, Labor & Pensions (HELP) Committee in July.
The EBSA Investigations Transparency Act (HR 2869), introduced by Rep. Lisa McClain (MI), a member of the House GOP leadership, will create more transparency and provide better oversight of EBSA by requiring the agency to provide an annual report to Congress of all open investigations and their disposition.
The Balance the Scales Act (HR 2958), introduced by Rep. Michael Rulli (OH), will curtail the use of common interest agreements by requiring EBSA to disclose any such agreements to Congress as well as the defendant so plan sponsors may appropriately defend themselves and exercise their rights to due process.
The two EBSA reporting bills reflect the significant concerns of The ESOP Association and other retirement security associations, including the ERISA Industry Committee and the American Benefits Council, who also supported the Retire Through Ownership Act.
The ESOP Association has been promoting these reform bills since its National Conference in May, generating support and momentum for them. In July, TEA President and CEO James Bonham was asked to testify before the House Education and Workforce Committee about the investigative abuses that have been levelled against ESOPs for decades. That testimony can be found here.
