On July 30, the Senate Health, Education, Labor and Pensions (HELP) Committee approved two largely administrative ESOP bills. However, the committee’s chairman, Sen. Bill Cassidy (R-LA), withdrew from consideration his larger ESOP bill that would substantially increase the amount of employer stock that can be contributed to ESOP participants’ accounts.

Unanimously approved were S.2403, the “Retire Through Ownership” Act, and S.1728, the “Employee Ownership Representation Act.”

S.2403: The Retire through Ownership Act, sponsored by Sens. Roger Marshall (R-KS) and Time Kaine (D-VA), would require ESOPs to use the same standard the Internal Revenue Service (IRS) uses to value closely-held private companies for tax purposes, sales, and settling legal disputes. Currently, valuation is done under separate Employee Benefits Security Administration (EBSA) standards that critics say are unclear. In explaining his bill Sen. Kaine said, “For 50 years they (EBSA) haven’t” issued clear valuation standards. They’ve started and stopped a couple of times. This would finally establish a principle.” The bill does, however, authorize EBSA to issue further regulatory clarity on valuation standards.

S.1728: Sponsored by Sen. Cassidy, S.1728 would create a new Office of Employee Ownership within the Department of Labor (DOL) that would be separate from EBSA. The new office would work under a seven-member bipartisan federal advisory council that would make recommendations and examine employee-ownership policy. The bill would also add two new members, to come from the ESOP community, to the ERISA Advisory Council.

Withdrawn from consideration was a Cassidy bill, S.1727, that would provide that contributions of employer stock to ESOP plan participants would not count towards the cap on contributions in current law. Sen. Cassidy said the bill was withdrawn from the mark-up schedule due to revenue estimates that put the cost of the bill at $155.6 billion over 10 years. He said he is now looking at ways to reduce the bill’s cost.

Prospects: These ESOP bills could find their way into year-end government funding (or other) legislation, or could be part of a potential SECURE 3.0 initiative next year.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.