Senate Passes Two ESOP Proposals

The Senate passed by unanimous consent two proposals aimed at strengthening Employee Stock Ownership Plans (ESOPs). S. 1728, the Employee Ownership Representation Act, sponsored by Senator Bill Cassidy (R-LA), would do the following.

• Add two ESOP board members to the ERISA Advisory Council.
• Establish a seven-member Advisory Council on Employee Ownership.
• Direct the Secretary of Labor to establish the Office of Employee Ownership in the Department of Labor (DOL) separate from the Employee Benefits Security Administration for the purposes of carrying out the Employee Ownership Initiative established under section 346 of the SECURE 2.0 Act.
• Establish the Advocate for Employee Ownership within the Employee Ownership Initiative.

S. 2403, the Retire Through Ownership Act, co-sponsored by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA), would do the following.

• Amend the definition of “adequate consideration” under ERISA to provide a fiduciary with good faith reliance on the methodologies set forth under Internal Revenue Service Revenue Ruling 59-60 in determining the fair market value of an asset.
• Clarify that the change to the definitions does not preclude the DOL from providing interpretive guidance nor would it expand the regulatory authority of the DOL or modify a fiduciary’s obligations under section 404 of ERISA.

Both bills will now go to the House of Representatives for consideration.