Retire through Ownership Act
Retire through Ownership Act
Plain Language Summary
# Retire through Ownership Act Summary **What it does:** This bill simplifies how Employee Stock Ownership Plans (ESOPs) value company stock that isn't publicly traded. Currently, determining the fair market value of private company shares can be complicated and costly. The bill would allow ESOP fiduciaries (the people managing the plans) to rely on valuations from independent appraisers, as long as those appraisers follow established IRS guidelines for valuing closely held businesses. **Who it affects:** The bill primarily affects employees who participate in ESOPs—retirement plans where workers build ownership stakes in their company's stock as part of their compensation. It also affects the companies offering these plans and the appraisers who value them.
Small and mid-sized companies with private ownership structures would likely benefit most, as they often struggle with valuation costs and complexity. **Current status:** The bill is currently in committee and has not yet been voted on by the full House or Senate. It was introduced by Rep. Rick Allen (R-GA) and remains in the early stages of the legislative process.
CRS Official Summary
Retire through Ownership ActThis bill allows the fiduciary of an Employee Stock Ownership Plan (ESOP) to rely on a valuation provided by an independent valuation or business appraiser in determining the fair market value of the plan's securities if the securities are not traded on a national securities exchange (i.e., not publicly traded) and the expert or appraiser follows specified methodologies. In general, ESOPs are defined contribution pension plans where employees accrue shares of their employers' stock in individual accounts as part of their compensation. After separating from employment or retiring, employees receive the cash value of their shares.Under the bill, an independent appraiser or expert must adhere to the methodology established under the Internal Revenue Service Ruling 59-60, which prescribes the factors a professional business appraiser should consider in forming a valuation of the stock for a closely held business.
Latest Action
Placed on the Union Calendar, Calendar No. 383.