New ESOP Valuation Rules Could Come as Early as January 2026

The new regulatory agenda for the Department of Labor (DOL) indicates that new regulations for ESOP valuations could come as soon as January 2026. The regulations were required by Section 346 of the SECURE 2.0 Act of 2022. The release notes that “[t]o inform this action, the Department established a pre-rule outreach plan to broaden public participation and community engagement in the regulatory process. This includes meeting with a range of stakeholders (including ESOP sponsors, appraisers, labor organizations and academics) to hear about issues they believe should be addressed in the Department’s guidance. The goal of the outreach plan is to inform this regulatory action through meaningful and equitable opportunities for public input by a range of interested or affected parties, including underserved communities.”

In December 2024, the DOL issued proposed rules that would govern the valuation of company stock in an ESOP. The Trump administration withdrew the rules in January 2025. Many in the ESOP community thought the proposed rules included impractical provisions, although other provisions were in line with common practice. The new leadership of the DOL has pledged to be more friendly toward ESOPs than were prior administrations.

These proposed rules come after 51 years of ESOPs being part of federal legislation. During that time, although ESOP stock has been valued without the benefit of final regulations, the DOL has been actively engaged in investigations, litigation, and reaching process agreements. There are differing views on whether this has affected the ESOP formation rate and, if so, how much.