On October 16, 2026, President Donald Trump signed S.2403, the Retire Through Ownership Act into law. This effort was led by Sens. Tim Kaine (D-VA) and Roger Marshall (R-KS) as well as Rep. Rick Allen (R-GA). This legislation received strong bipartisan support. It was unanimously passed by the U.S. Senate and passed by the House with a 401 to 14 vote.
For many years, the employee stock ownership plan (ESOP) community has been seeking clarity with respect to ESOP valuations and how to better define adequate consideration in the context of an ESOP transaction. This lack of clarity historically has created concerns around fiduciary liability when forming a new ESOP and has had a dampening effect on the number of new ESOP formations.
The Retire Through Ownership Act amends the Employee Retirement Income Security Act of 1974 (ERISA), providing ESOP fiduciaries with more guidance concerning the valuation of stock of privately held companies. This law provides that an ESOP fiduciary may rely in good faith on a valuation provided by a business appraiser or independent valuation expert provided that the appraiser relies on the methodologies and principals incorporated in IRS Revenue Ruling 59-60. This Ruling has long been replied upon for the valuation of closely held companies for purposes such as estate and gift tax purposes.
Jim Bonhan, president and CEO of The ESOP Association said, “The Retire Through Ownership Act strengthens confidence in the valuation process for millions of employee owners and gives business owners a clearer path to an ESOP transition. Combined with the Trump administration’s pro-ESOP direction at the Department of Labor, it creates a historic opportunity to expand employee ownership in America.”
If you have questions on how the passage of the act may impact your decision to implement an ESOP, contact your Forvis Mazars advisor.