ESOP Bill Heads to President’s Desk

Just hours before the House of Representatives adjourned earlier than expected for its midterm recess on Wednesday evening, it approved a bill meant to provide legal clarity and stability to employee stock ownership plans.

Now headed for President Donald Trump’s office to be signed or vetoed, the Retire Through Ownership Act is intended to shift plan advisers’ and plan sponsors’ approach to ESOPs by replacing valuation ambiguity—which has resulted in litigation risks for companies—with a clear, standardized framework.

Introduced by Senators Roger Marshall, R-Kansas, and Tim Kaine, D-Virginia, in July 2025, the legislation was passed unanimously by the Senate in October 2025.

Under the act, an ESOP fiduciary may rely in good faith on a valuation provided by an independent professional valuation expert or business appraiser who uses the principles presented in IRS Revenue Ruling 59-60. That document provides a widely recognized framework for valuing closely held businesses, outlining the factors qualified appraisers should consider when determining fair market value.

“This bill … points to the way that the IRS values—or the process the IRS will use in valuing privately held stock—and that’s IRS Revenue Ruling 59-60,” says Jim Bonham, president and CEO of the ESOP Association, a trade association.

The ESOP Association led a multi-year advocacy campaign for the bill, arguing that valuation clarity has been needed since the enactment of the Employee Retirement Income Security Act of 1974.

“As a fiduciary for the ESOP plan, which is a retirement plan under [the Employee Retirement Income Security Act], part of their largest responsibility is on an annual basis to set the share price, the valuation, of the company that is owned by the ESOP,” Bonham says. “The Department of Labor that was responsible for establishing this regulation has not done so. So we have been seeking to get this regulation done for over five decades.”

The chair of the House Committee on Education and the Workforce, Representative Tim Walberg, R-Missouri, also praised the passage of the bill, saying the legislation creates clear, consistent rules for valuing ESOP stock, which, in turn, protects workers’ retirement savings, reduces legal risk and expands opportunities for employee ownership.

“ESOPs provide employees with a meaningful foothold in capital ownership—allowing them to share in the success they’ve helped create. Unfortunately, lack of clarity in the law has brought uncertainty and created legal grey areas. S. 2403 fixes this problem by providing clear guidance,” Walberg said in a statement. “Employee ownership is a proven asset for workers, businesses, and our economy, and it should not be undermined by ambiguity in the law.”

Annuities, Insurance Forms Bill Gets Committee Approval

In a separate Wednesday vote, the U.S. House Committee on Financial Services passed the Consumer-Led Enhancement of Annuity and Insurance Registration Forms [CLEAR Forms] Act.

Introduced on September 2 by Representatives Zach Nunn, R-Iowa, and Brittany Pettersen, D-Colorado, the bill was approved by a vote of 42 to 7.

The act would change the requirement that insurance products, such as registered index-linked life insurance and contingent deferred annuities, be registered with forms designed for corporate securities offerings. The Securities and Exchange Commission would be directed to use registration forms designed for RILUs, CDAs and other registered non-variable insurance contracts.

The legislation would also require the SEC to develop a disclosure framework focused on educating consumers about insurance-related decisionmaking.

According to the Insured Retirement Institute, an outspoken supporter of the bill alongside the American Council of Life Insurers, the bill would also promote consistency across SEC registration requirements for insurance products.

“The House Financial Services Committee took an important step forward by passing the CLEAR Forms Act,” said Paul Richman, IRI’s chief government and political affairs officer, in a statement. “This consumer-focused reform will provide retirement savers with clearer, more appropriate product information while supporting continued marketplace innovation.”