U.S. Senator Bill Cassidy (R-LA) on Tuesday presented two bills that would further support employee stock ownership plans (ESOPs).
Sen. Cassidy, who also serves as chair of the Senate, Health, Education, Labor, and Pensions (HELP) Committee, introduced the Employee Ownership Representation Act and the Employee Ownership Fairness Act.
“ESOPs put more money in Americans’ pockets and lead to a more productive workforce,” he said. “By strengthening ESOPs, we strengthen workers and their ability to invest in their futures.”
The Employee Ownership Representation Act would add two ESOP-focused board members to the ERISA Advisory Council in an effort to support employee ownership plans during meetings.
The ERISA Advisory Council is a group of 15 members who advise the Department of Labor (DOL) on issues surrounding ERISA.
Currently, there are three members in the council who represent employee organizations, three who are employer representatives, three representing the general public, and one representative each from insurance, corporate trust, actuarial counseling, investment counseling, investment management, and accounting industries. No member in the council currently represents employee ownership organizations.
With the addition of two new members, the council would increase to 17 members, according to text of the legislation.
The Employee Ownership Fairness Act, also announced by Sen. Cassidy on Tuesday, would amend ERISA to disregard ESOP contributions in total annual 401(k) contribution limits.
Participants enrolled in ESOPs and defined contribution (DC) plans are subject to an annual cap of $23,500 for 2025. Under the text of the bill, ESOP contributions would no longer count towards this limit.
The legislation argues that incorporating ESOP contributions in DC plan limits “impedes the ability for ESOP employees to diversify their retirement savings and make their own retirement savings contributions and often require their employers to deny matching contributions they would otherwise receive.”
By incorporating the bill, “employees will save more money for retirement and can invest more in their employer’s stock,” Sen. Cassidy concluded in his release.
SEE MORE:
New Coalition Promotes ESOP Adoption
Proposed Rule to Help Fiduciaries Properly Value Employer Stock in ESOPs
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.