The "Retire through Ownership Act" amends the definition of adequate consideration in the Employee Retirement Income Security Act of 1974. The amendment permits a fiduciary of an employee stock ownership plan to rely on a valuation provided by an independent valuation expert or business appraiser when determining the fair market value of an asset. It specifies that this amendment does not expand the regulatory authority of the Secretary beyond that available before the Act's enactment or modify a fiduciary's obligations under section 404. The amendments apply to determinations made after the Act's enactment.
Retire through Ownership Act
This bill allows the fiduciary of an Employee Stock Ownership Plan (ESOP) to rely on a valuation provided by an independent valuation expert or business appraiser in determining the fair market value of the plan's securities if the securities are not traded on a national securities exchange (i.e., not publicly traded) and the expert or appraiser follows specified methodologies.
In general, ESOPs are defined contribution pension plans where employees accrue shares of their employers' stock in individual accounts as part of their compensation. After separating from employment or retiring, employees receive the cash value of their shares.
Under the bill, an independent expert or appraiser must adhere to the methodology established under the Internal Revenue Service Ruling 59-60, which prescribes the factors a professional business appraiser should consider in forming a valuation of the stock for a closely held business.
