Skip to main content
A cluster of dim light bulbs with one bright bulb in the center.

Senate Passes Legislation Favorable to ESOPs

The RISE & SHINE Act was recently passed by the Senate HELP Committee, contains favorable provisions for ESOPs. Read on for details.
banner background

By a unanimous voice vote, on June 14, 2022, the Senate Committee on Health, Education, Labor and Pensions (HELP Committee) passed S.4353, known as the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE & SHINE Act).

The legislation, jointly sponsored by Committee Chair Patty Murray (D-WA) and Ranking Member Richard Burr (R-NC), was first introduced on June 7 and builds off provisions introduced in the RISE Act (H.R. 5891) and SECURE Act 2.0. 

The two favorable provisions benefiting employee stock ownership plans (ESOP) include:

  1. Requires the U.S. Department of Labor (DOL) to provide formal guidance on “acceptable standards and procedures to establish good faith fair market value for shares of a business to be acquired by an employee stock ownership plan” (as defined under ERISA section 407(d)(6)). Often called “adequate consideration” by ESOPs and related professionals, no formal regulatory guidance has existed since the passage of ERISA in 1974, causing costly uncertainty for ESOPs.
  2. Authorizes up to $50 million in grants over five years from the DOL for increasing education and awareness about employee ownership and to promote employee ownership in states and localities (if appropriated). This would be the first federal grant program specifically dedicated to promoting employee ownership.

Next, the bill will be considered by the full Senate. If approved, it then goes to the House of Representatives for approval. 

To learn more about ESOPs, reach out to a professional with Forvis Mazars or submit the Contact Us form below.


Related FORsights

Like what you see?
Subscribe to receive tailored insights directly to your inbox.