S. 2403: Retire through Ownership Act

This bill, titled the **Retire through Ownership Act**, seeks to amend the Employee Retirement Income Security Act (ERISA) of 1974 with a focus on employee stock ownership plans (ESOPs). The main provisions of the bill can be summarized as follows:

Amending Definition of Adequate Consideration

The bill aims to redefine what is meant by "adequate consideration" in the context of certain closely held stock when determining fair market value. The specific changes include:

• Redesignating certain clauses and subparagraphs related to adequate consideration in the act.
• Establishing that fiduciaries of employee stock ownership plans may rely on specific methodologies from the Internal Revenue Service, particularly referring to **Revenue Ruling 59-60**. This ruling provides a set of principles for valuing stock and other assets.

Reliance on IRS Methodologies

The bill allows plan fiduciaries to rely on good faith on these IRS principles when determining the fair market value of stock that is part of an ESOP. This is significant because it provides a clearer framework for fiduciaries, potentially reducing legal uncertainties and helping them make informed decisions regarding stock evaluations.

Effective Date

The amendments proposed in this bill would take effect for determinations made on or after the date when the bill is enacted. This means that once the bill becomes law, the updated guidance will apply to all employee stock ownership plans from that point forward.

Objectives of the Bill

The overall goal of the **Retire through Ownership Act** is to enhance the viability and effectiveness of employee stock ownership plans, encouraging businesses to utilize these plans as a way to facilitate employee retirement through ownership of the company stock. By amending the definition of adequate consideration, the bill aims to simplify the valuation process and foster a more supportive environment for ESOPs.

Relevant Companies

None found