Retire Through Ownership Act Passes, Providing ESOP Valuation Safe Harbor

The Retire Through Ownership Act, S. 2403, which was passed unanimously in the Senate in October 2025, was passed in the House by a 401-14 vote on September 16 and will now go to President Trump to be signed into law. 

This blog previously reported on the introduction and later passage of the Senate bill in July and October 2025, and the introduction of the companion House bill in September 2025. As reported there, the Retire through Ownership Act was introduced by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA) to address the risks of ESOP valuation by creating a “safe harbor” for ESOP trustees. It would do this by allowing ESOP trustees to rely on independent appraisals by qualified ESOP appraisal firms using guidance under IRS Revenue Ruling 59-60.

First issued in 1959 for valuing small business stock for gift and estate tax purposes, Revenue Ruling 59-60 outlines the basic valuation principles that ESOP valuations typically use, such as weighting earnings, assets, and comparable company approaches; using discounted or capitalized earnings to project enterprise value; and calculating discount rates based on the weighted average cost of capital. ERISA was not enacted until 1974, so Revenue Ruling 59-60 did not apply specifically to ESOPs. In late 2024, the DOL issued its own proposed valuation guidelines, which would have been much stricter, but the new administration recalled them. The Retire through Ownership Act allows the Secretary of Labor to issue regulatory guidance in interpreting the Act's valuation provisions.