IntroducedIntroduced Jul 23, 2025

S. 2403: Retire through Ownership Act

This legislation was introduced in the on 2025-07-23. It currently has a status of Introduced.

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AI Short Summary

The Retire through Ownership Act clarifies how Employee Stock Ownership Plans (ESOPs) determine the fair market value of closely held stock by allowing plan fiduciaries to rely on standard IRS guidelines.

RetirementLaborFinance

Sponsors

Sen. Marshall, Roger [R-KS]

Sen. Marshall, Roger [R-KS]

Primary Sponsor (R-KS)

This bill aims to make it easier and more predictable for employee stock ownership plans (ESOPs) to value closely held company stock. It does this by explicitly allowing plan trustees to rely on standard Internal Revenue Service (IRS) guidelines to determine the fair market value of the stock.

Summary: S. 2403, the "Retire through Ownership Act," amends the Employee Retirement Income Security Act of 1974 (ERISA) to provide a clearer legal definition of "adequate consideration" for stocks that are not publicly traded. When employee stock ownership plans (ESOPs) purchase stock from a closely held company, they must do so for "adequate consideration" (fair market value). This bill establishes that ESOP fiduciaries can legally rely in good faith on established IRS valuation principles to make this determination, reducing regulatory uncertainty.

Key Provisions:

  • Amends ERISA Definitions: Restructures Section 3(18) of ERISA (29 U.S.C. 1002(18)), which defines "adequate consideration."
  • Adopts IRS Valuation Standard: Explicitly allows an ESOP fiduciary to rely in good faith on the valuation principles and methodologies of IRS Revenue Ruling 59-60 when determining the fair market value of closely held stock.
  • Effective Date: Applies these valuation rules to all eligible determinations made on or after the date of the bill's enactment.

Impact Analysis:

  • For ESOP Fiduciaries and Trustees: Currently, valuing closely held business stock is a complex process that frequently leads to regulatory scrutiny and litigation from the Department of Labor (DOL) over whether "adequate consideration" was paid. By explicitly allowing fiduciaries to rely on IRS Revenue Ruling 59-60—a long-standing, widely accepted standard for valuing closely held businesses—the bill provides a clearer, more predictable guideline for fiduciaries to avoid legal liability.
  • For Business Owners and Workers: The regulatory uncertainty surrounding ESOP valuations can discourage private business owners from transitioning their companies to employee ownership. Providing a clear statutory safe harbor for valuation may lower administrative costs, reduce litigation risks, and encourage more companies to establish ESOPs, thereby expanding retirement savings opportunities for workers through company ownership.
  • For Federal Regulators: The bill helps align the valuation standards used by the IRS with those enforced by the Department of Labor under ERISA, potentially creating a more unified federal approach to business valuation for retirement plans.
Co-Sponsors (1)
Sen. Kaine, Tim [D-VA]

Sen. Kaine, Tim [D-VA]

Co-Sponsor (D-VA)

Bill Rendering
119 S2403 RS: Retire through Ownership ActU.S. Senate2025-09-11text/xmlENPursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
II
119th CONGRESS
1st Session
S. 2403
IN THE SENATE OF THE UNITED STATES
July 23, 2025 Mr. Marshall (for himself and Mr. Kaine) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions
September 11, 2025 Reported by Mr. Cassidy, with an amendmentStrike out all after the enacting clause and insert the part printed in italic
A BILL

To amend the Employee Retirement Income Security Act of 1974 to provide a clear definition of adequate consideration for certain closely held stock, and for other purposes.

1.Short title

This Act may be cited as the "Retire through Ownership Act".

2.Amending adequate consideration definition
(a)In General

Section 3(18) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(18)) is amended—

(1)

by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively;

(2)

by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;

(3)

by inserting "(A)" before "The term"; and

(4)

by adding at the end the following:

(B)

For purposes of clause (ii), a fiduciary of an employee stock ownership plan as defined in section 407(d)(6) may make a good faith reliance on the principles and methodologies set forth in Internal Revenue Service Revenue Ruling 59–60 (as in effect on the date of enactment of the ERISA Adequate Consideration Act of 2025) in determining the fair market value of an asset described in such clause.

.
(b)Effective Date

The amendments made by subsection (a) shall apply with respect to determinations described in section 3(18)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(18)(B)) (as added by such subsection) that are made on or after the date of enactment of this Act.

1.Short title

This Act may be cited as the "Retire through Ownership Act".

2.Amending adequate consideration definition
(a)In General

Section 3(18) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(18)) is amended—

(1)

by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively;

(2)

by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;

(3)

by inserting "(A)" before "The term"; and

(4)

by adding at the end the following:

(B)
(i)

For purposes of clause (ii) of subparagraph (A), a fiduciary of an employee stock ownership plan (as defined in section 407(d)(6)) may make a good faith reliance on a valuation provided by an independent valuation expert or business appraiser that has relied upon the principles and methodologies set forth in Internal Revenue Service Revenue Ruling 59–60 (as amplified and modified by the Internal Revenue Service from time to time) in determining the fair market value of an asset described in such clause.

(ii)

Clause (i) shall not be interpreted to—

(I)

preclude the Secretary from promulgating, in accordance with section 553 of title 5, United States Code, any regulation interpreting such clause;

(II)

expand the regulatory authority of the Secretary with respect to the term "adequate consideration" beyond such authority available to the Secretary on the day before the date of enactment of the Retire through Ownership Act; or

(III)

modify a fiduciary's obligations under section 404.

.
(b)Effective Date

The amendments made by subsection (a) shall apply with respect to determinations described in section 3(18)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(18)(B)) (as added by such subsection) that are made on or after the date of enactment of this Act.

September 11, 2025 Reported with an amendment