Retire through Ownership Act
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This bill would allow employee stock ownership plan fiduciaries to use independent appraisals to value non-publicly traded securities.
What it does
This bill would allow the fiduciaries of Employee Stock Ownership Plans (ESOPs) to determine the fair market value of non-publicly traded securities by relying on assessments from independent valuation experts or business appraisers. To qualify, these appraisers would be required to follow specific methodologies established under Internal Revenue Service Ruling 59-60 for valuing closely held businesses. This process would apply to retirement plans where employees earn company stock as compensation and receive the cash value of those shares upon retirement or leaving the company.
Who is affected
This bill affects fiduciaries of Employee Stock Ownership Plans (ESOPs) and independent business appraisers by establishing specific valuation standards for non-publicly traded securities. It also impacts employees who participate in these defined contribution pension plans and receive employer stock as part of their retirement compensation. Additionally, the legislation applies to closely held businesses whose stock is held within an ESOP and must be valued according to Internal Revenue Service methodologies.
Key provisions
- Valuation of non-publicly traded securities. Allows the fiduciary of an Employee Stock Ownership Plan (ESOP) to determine the fair market value of employer securities using valuations from independent appraisers if the securities are not traded on a national exchange.
- Adherence to IRS valuation methodologies. Requires independent appraisers to follow the specific methodologies and factors established under Internal Revenue Service Ruling 59-60 when valuing stock for closely held businesses.
Fiscal impact
Not applicable: No CBO cost estimate available
Effective dates
Not applicable: Official Summary does not address effective dates
Relationship to existing law
The bill modifies the regulatory requirements for Employee Stock Ownership Plans (ESOPs) by requiring independent appraisers to follow the valuation methodologies established under Internal Revenue Service Ruling 59-60 when determining the fair market value of non-publicly traded securities.
Stated purpose
The bill aims to standardize the valuation process for non-publicly traded securities within Employee Stock Ownership Plans (ESOPs) by allowing plan fiduciaries to rely on independent appraisers who follow specific Internal Revenue Service methodologies. This provides a framework for determining the fair market value of employer stock held in these retirement accounts.