President Trump on Thursday signed the Retire through Ownership Act into law, giving trustees of employee stock ownership plans a statutory basis to rely in good faith on independent appraisals, prepared under a long-standing IRS valuation ruling, when they price shares of privately held companies.
The measure, S. 2403, amends the Employee Retirement Income Security Act of 1974 to define adequate consideration for certain closely held stock. Under the enrolled text, a fiduciary of an employee stock ownership plan, or ESOP, may make "a good faith reliance" on a valuation from an independent valuation expert or business appraiser who followed the principles and methodologies of Internal Revenue Service Revenue Ruling 59-60 in determining fair market value. The provision applies to valuation determinations made on or after the day the bill became law.
How that stock is priced is, in the words of The ESOP Association, "essential to protecting employee owners' retirement savings." The trade group, which led the advocacy campaign for the bill and made it its top priority in the 119th Congress, says the Labor Department has never issued regulations defining adequate consideration for privately held ESOP stock. In the group's account, that left fiduciaries facing uncertainty and potential liability even when they acted prudently and hired qualified, independent appraisers, and the litigation, investigations and compliance costs that followed weighed on existing plans and discouraged owners from creating new ones.
The benchmark lawmakers settled on predates ERISA by 15 years. Revenue Ruling 59-60 was first issued in 1959 to value small business stock for gift and estate tax purposes, and it outlines the basic principles ESOP valuations typically use, such as weighting earnings, asset and comparable company approaches, according to the National Center for Employee Ownership. Because ERISA was not enacted until 1974, the ruling did not apply to ESOPs specifically.
The bill met little resistance in Congress. The Senate passed it unanimously in October 2025, and the House approved it 401-14 on Sept. 16. Sens. Roger Marshall, a Kansas Republican, and Tim Kaine, a Virginia Democrat, introduced the measure, and the ESOP Association also named Rep. Rick Allen among its sponsors.
The law follows a reversal at the Labor Department. In late 2024 the department proposed its own valuation guidelines, which the employee ownership center said would have been much stricter, and the new administration recalled them. James Bonham, president and chief executive of the ESOP Association, called the measure "the most important ESOP law enacted in decades" in a statement Thursday. He said it "strengthens confidence in the valuation process for millions of employee owners and gives business owners a clearer path to an ESOP transition," adding: "Combined with the Trump administration's pro-ESOP direction at the Department of Labor, it creates a historic opportunity to expand employee ownership in America."
The statute carries its own limits. Its text says the new provision may not be read to modify a fiduciary's obligations under section 404 of ERISA, and it leaves the labor secretary able to write regulations interpreting the clause while barring any reading that would expand the department's authority over adequate consideration beyond what it held the day before enactment. The employee ownership center has described the measure as a "safe harbor" for ESOP trustees. An Oct. 1 analysis in International Employment Lawyer, a legal trade publication, took a narrower view, describing the bill as offering clarity on valuation rather than a safe harbor and saying it would give fiduciaries greater certainty over adequate consideration while preserving their ERISA duties.
Trump signed two other Senate bills on Thursday, the White House said. One, the Crow Tribe Water Rights Settlement Amendments Act of 2025, amends a 2010 settlement law to provide more flexibility to complete certain water projects on the Crow Tribe's reservation in Montana. The other, the Illegal Red Snapper and Tuna Enforcement Act, directs the Commerce Department to develop a standard method, based on chemical analysis, for identifying the country of origin of seafood.