HR 5169119th CongressIntroduced

Retire through Ownership Act

Introduced: Sep 8, 2025

Economy & TaxesSocial Services

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Retire through Ownership Act amends ERISA’s definition of “adequate consideration” for closely held stock in employee stock ownership plans (ESOPs). Specifically, it lets a plan fiduciary rely in good faith on a valuation provided by an independent appraiser if that valuation used the principles and methodologies set forth in IRS Revenue Ruling 59-60 (as updated over time) to determine fair market value. The change applies to determinations made on or after the law’s enactment date. In short, the bill provides a clear, standards-based path for valuing closely held stock used in ESOPs, potentially reducing fiduciary risk and increasing consistency in how fair market value is established.

Key Points

1Defines adequate consideration for closely held stock to include reliance on an independent valuation that uses Rev. 59-60 principles, if the valuation is applied in good faith by the ESOP fiduciary.
2The new provision applies to determinations under ERISA 3(18)(B) and becomes effective for determinations made on or after enactment.
3Uses the IRS Revenue Ruling 59-60 (and any updates) as the authoritative framework for determining fair market value in these valuations.
4The change is framed as the fiduciary’s allowed reliance, aiming to clarify what counts as adequate consideration and reduce ambiguity in valuations.
5The bill is titled “Retire through Ownership Act,” signaling a focus on facilitating employee ownership through ESOPs.

Impact Areas

Primary group/area affected:- ESOP fiduciaries and plan administrators, particularly those evaluating closely held employer stock.- Employees participating in ESOPs (beneficiaries) who own stock through the plan.Secondary group/area affected:- Private companies with or considering ESOP structures, as valuation standards may affect how stock is valued and transferred to the ESOP.- Independent valuation professionals and appraisers, who provide the valuations used by fiduciaries.Additional impacts:- Potentially greater consistency and predictability in ESOP valuations by anchoring them to Rev. 59-60 methodologies.- Possible changes to fiduciary liability risk profiles, favoring those who use independent valuations aligned with Rev. 59-60.- Interaction with existing ERISA fiduciary standards and due diligence processes when determining fair market value for closely held stock.

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