ESOP bill clears the House; exit advice gets a rulebook

Senators Roger Marshall of Kansas and Tim Kaine of Virginia introduced the Retire Through Ownership Act in July 2025, as PLANADVISER reported; the Senate passed it unanimously that October, and the House followed on Wednesday evening, hours before adjourning early for its midterm recess, sending it to President Donald Trump for signature or veto.

The mechanics are narrow: an ESOP fiduciary may rely in good faith on a valuation provided by an independent professional valuation expert or business appraiser who applies the principles of IRS Revenue Ruling 59-60, the framework appraisers use to weigh the factors that set fair market value in a closely held business. The purpose is to swap the valuation ambiguity that has produced litigation risk for companies for a standardized reliance standard, which gives the annual appraisal a defense without handing anyone a formula.

Jim Bonham, president and CEO of the ESOP Association, describes the gap the bill fills as the ESOP fiduciary's largest annual responsibility: setting the share price of the company the plan owns, a task for which the Department of Labor was to establish the regulation and has not done so, he says. His association led a multi-year campaign for the legislation and argues the clarity has been needed since ERISA passed in 1974, a wait Bonham puts at 'over five decades'; Representative Tim Walberg of Missouri, chair of the House Committee on Education and the Workforce, said the act creates clear, consistent valuation rules that protect workers' retirement savings, reduce legal risk, and expand employee ownership.

Nothing described in the act moves the annual obligation itself: the fiduciary still sets the share price, the appraiser still has to qualify as independent, and good-faith reliance holds only when the method is 59-60. The work shifts upstream. For an owner-client weighing a sale to employees against a letter of intent from an outside buyer, the valuation file becomes the deliverable, and building it to 59-60 factors before the ESOP is a live candidate costs less than defending a number after the fact.

The participant side needs the same attention. An ESOP is a retirement plan under ERISA, and its asset is the company the employees work for—what Walberg calls a meaningful foothold in capital ownership. That concentration is the decumulation problem in miniature, and as this publication has argued, the retirement income conversation starts with the floor and the reserve fund; inside an ESOP, the floor is whatever the annual appraisal says it is.

Advisers are running the same clock as their clients: Cerulli counts 35% of advisers retiring within a decade. Both sides of the succession wave are picking dates, and the ESOP just became the exit route with a stated valuation standard behind it, worth saying out loud the next time an owner asks whether selling to the employees is a real option or a consolation prize. Signing or vetoing is the last variable, and neither outcome changes what an owner-client has to compare: a cash offer from a buyer and a valuation the employees' plan can rely on. The 59-60 file is the piece that makes those two comparable, and it is buildable now.