Federal law requires employee stock plans to pay no more than a good faith fair market value for company stock, without a regulatory standard for how to value it.
The Retire through Ownership Act updates how retirement plans value closely held stock, making it easier for fiduciaries to determine fair market value using expert opinions. This clarity helps protect retirement savings for employees involved in employee stock ownership plans.
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No committee member filed a written objection. The committee approved it 35 to 0.
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 or business appraiser in determining the fair market value of the plan's assets if the assets are not securities for which there is a generally recognized market 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 appraiser or expert 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.
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