Retire through Ownership Act
Summary
The "Retire through Ownership Act" (H.R. 5169) aims to amend the Employee Retirement Income Security Act (ERISA) of 1974. The bill seeks to provide a clearer definition of "adequate consideration" for certain closely held stock within employee stock ownership plans (ESOPs). It allows fiduciaries to rely on valuations from independent experts who use IRS Revenue Ruling 59-60 principles.
Expected Effects
The primary effect of this bill would be to provide greater clarity and legal certainty for ESOP fiduciaries. This clarity could encourage more companies to establish or maintain ESOPs. The bill also limits the Secretary of Labor's regulatory authority beyond its existing scope.
Potential Benefits
- Provides clarity for ESOP fiduciaries in valuing closely held stock.
- Potentially reduces the risk of litigation related to valuation disputes.
- May encourage the formation and continuation of ESOPs, benefiting employees through ownership.
- Limits potential regulatory overreach by the Secretary of Labor.
- Offers a defined standard (IRS Revenue Ruling 59-60) for valuation.
Potential Disadvantages
- The reliance on IRS Revenue Ruling 59-60 might not always reflect the most current valuation practices.
- The bill does not address other potential issues with ESOPs, such as company performance or diversification.
- The limitation on the Secretary of Labor's regulatory authority could reduce oversight of ESOPs.
- The bill's focus on closely held stock may not benefit employees of publicly traded companies.
- Potential for independent valuation experts to misapply Revenue Ruling 59-60, leading to inaccurate valuations.
Constitutional Alignment
The bill appears to align with the Constitution, particularly Article I, Section 1, which grants legislative powers to Congress. It does not appear to infringe upon any specific constitutional rights or protections. The bill amends existing legislation (ERISA) and provides a statutory definition, which falls within Congress's enumerated powers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).