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Economy

Trump signs Retire Through Ownership Act into law for employee stock plans

President Trump signed the Retire Through Ownership Act on Thursday, setting clear valuation rules for employee stock ownership plans after bipartisan approval in Congress.

By admin Oct. 15, 2026 · 9:42 PM ET 2 min read

A modern glass office building exterior on a sunny day, with pedestrians walking at a distance

President Trump signed the Retire Through Ownership Act into law on Thursday. The law sets a clear standard for how employee stock ownership plans value company stock, The ESOP Association announced.

A modern glass office building exterior on a sunny day, with pedestrians walking at a distance
A modern glass office building exterior on a sunny day, with pedestrians walking at a distance

The bill, S. 2403, passed the Senate unanimously in October 2025 and cleared the House 401 to 14 on September 16, 2026. Under the new law, ESOP fiduciaries can rely in good faith on a valuation from an independent expert or business appraiser that follows the long-standing principles of IRS Revenue Ruling 59-60.

Why the law was needed

The Department of Labor has never issued regulations defining “adequate consideration” for privately held ESOP stock. That gap left fiduciaries facing uncertainty and possible liability even when they hired qualified independent appraisers, according to The ESOP Association. The resulting lawsuits, investigations and compliance costs weighed on existing plans and discouraged business owners from creating new ones.

A pen resting on paperwork with a signature on a wooden desk, text out of focus
A pen resting on paperwork with a signature on a wooden desk, text out of focus

The new law also allows the Secretary of Labor to issue regulatory guidance interpreting its valuation provisions, according to the National Center for Employee Ownership.

The bill was sponsored by Sens. Roger Marshall of Kansas and Tim Kaine of Virginia, with Rep. Rick Allen of Georgia carrying it in the House.

What supporters expect

Business people sitting around a conference table reviewing paperwork in a bright office
Business people sitting around a conference table reviewing paperwork in a bright office

James Bonham, president and CEO of The ESOP Association, called the law the most important ESOP legislation enacted in decades and said it would give business owners a clearer path to selling their companies to employees.

Industry attorneys told Bloomberg Tax they expect the measure to reduce litigation over ESOP transactions and renew interest in the plans as a retirement vehicle.

Workers in yellow safety vests moving cardboard boxes inside a warehouse
Workers in yellow safety vests moving cardboard boxes inside a warehouse

Employee stock ownership plans are most commonly created when a business owner nearing retirement sells the company to workers in the form of company shares, giving employees an ownership stake, according to Bloomberg Tax. Workers earn more shares the longer they stay, and can cash out when they leave or retire.

Reporting based on coverage by The ESOP Association and Bloomberg Tax.

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