Senate HELP Committee Advances ESOP Legislation
The Senate Committee on Health, Education, Labor and Pensions (HELP) today passed a multi-bill package that would promote employee stock ownership plans (ESOPs) within the Department of Labor (DOL).
The Employee Ownership Representation Act was introduced and sponsored by U.S. Senator and chair of the HELP Committee Bill Cassidy (R-LA), while the Retire Through Ownership Act was presented by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA). The legislation received strong bipartisan support from lawmakers and the ESOP Association, an advocacy group.
Backers of the legislation say it would promote implementation and usage of ESOPs among employers. Last week, industry experts, including ESOP Association President and CEO Jim Bonham, testified against the DOL’s Employee Benefit Security Administration (EBSA) with claims that the subagency operated on an “anti-ESOP bias” by ordering baseless investigations that deter plan sponsors from offering the benefit while failing to provide regulatory guidance.
“Today is a significant milestone for ESOPs and employee ownership in America,” said Bonham. “With unanimous and bipartisan passage of both bills, the HELP Committee is sending a clear message to the Department of Labor that Congress has had enough of the anti-ESOP bias at the DOL and is taking concrete steps to support ESOPs.”
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. Currently, the group is comprised of 15 members who advise the DOL on issues surrounding ERISA. With the addition of two new members, the council would grow to 17 members.
The legislation also incorporates the Advocate for Employee Ownership Act, sponsored by Senators Maggie Hassan (D-NH) and Steve Daines (R-MT). It would authorize the secretary of labor to appoint an advocate for employee ownership within the existing Employee Ownership Initiative at the DOL. This piece of legislation includes all types of ESOPs, regardless of whether they are part of an S-Corporation or C-Corporation business structure.
The Retire Through Ownership Act would allow an ESOP plan fiduciary to work with an independent business appraiser who follows regulatory guidelines under IRS Revenue Ruling 59-60. If these practices are followed, it would provide safe harbor protections for employers offering ESOPs.
“The Retire Through Ownership Act will finally provide additional certainty for ESOP trustees that rely upon an independent expert’s appraisal that follows guidelines contained in IRS 59-60, which is both longstanding and accepted,” said Bonham.
The unanimous vote now moves the legislation out of the committee and advances it to the full Senate.
SEE ALSO:
EBSA Nominee Aronowitz: ‘I Will End the War on ESOPs’
Sen. Cassidy Introduces Legislation Supporting ESOPs
Industry Voices Raise Alarms Over EBSA Practices in Latest Hearing
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.
