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URGENT Action Needed on Pro-ESOP Retirement Legislation

As you know, The ESOP Association has been working with Congress during this session on bipartisan retirement security legislation. That important legislation– which includes provisions that affect every ESOP and employee ownership in general – is being considered in the final days of the current Congress. If this legislation, which was painstakingly negotiated and enjoys broad bipartisan support, doesn’t pass now, the entire legislative process must start over next year. And with Republicans taking control of the House while Democrats retain a majority in the Senate, the two chambers’ competing priorities means there’s no guarantee the bill would look the same or even be brought up for a vote.

The ESOP Association needs you to take action today to show Congress your support for finishing the job on this important bill.

Click Below to Send a Letter to Your Senators and Member of Congress TODAY!

How to Participate:

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Engage Your Fellow Employee Owners, Peers, and Friends in the ESOP Community. Email them this link so they can express support as well. https://esopassociation.secure.force.com/actions/ESOPAction?actionId=AR0043

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Dear Representative,

As a supporter of employee ownership and member of The ESOP Association, I strongly encourage you to pass the bipartisan retirement security legislation being considered by Congress before the end of the year.  This critical bill, negotiated and considered in both houses of Congress, includes several key provisions that support employee stock ownership plans (ESOPs), and therefore I urge your support for it.

As you know, the House passed the Securing a Strong Retirement Act of 2022 (H.R. 2954) earlier this year with bipartisan support and more than 400 votes.  In addition to updating a variety of retirement security laws, this bill expanded the existing section 1042 tax provision available to ESOPs to finally include S corporations, something the employee ownership community has sought for years.  The Senate companion tax bill, the Enhancing American Retirement Now Act (EARN Act, S. 4808) includes similar language related to the section 1042 tax provision and received strong bipartisan support from the Senate Finance Committee.  This change is important for tax parity and fairness between S and C corporation ESOPs.

Additionally, the Senate retirement security bill, the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act (RISE and SHINE Act, S. 4353), includes two critical measures for ESOPs and employee ownership.  First, the bill creates an Employee Ownership Initiative at the U.S. Department of Labor to promote awareness of employee ownership.   At a time when our nation faces massive business succession needs, with nearly 3 million businesses transferring ownership affecting more than 32 million employees and $6.5 trillion in revenue, promoting employee ownership as an option has never been more critical or necessary.

Second, and perhaps most critically, the Senate RISE and SHINE Act mandates the U.S. Department of Labor conduct a formal rulemaking on the issue of the adequate consideration exemption – something it was directed to do when ERISA first passed in 1974.  Nearly a half century later, the Department’s failure to issue any sort of formal rulemaking or guidance, has led to drastic enforcement actions, arbitrary lawsuits, investigations, and a general bias against ESOPs.  Decades of regulatory uncertainty simply shouldn’t go unchecked, and the RISE and SHINE Act would fix this longstanding oversight.

ESOPs are a successful retirement tool that often outperform other retirement options, at a time when retirement security desperately needs to improve.  Independent studies also show that employee ownership provides greater workplace engagement, increases productivity, addresses wage equity, decreases turnover, and keeps jobs in our communities.  Simply put – employee ownership works.

More Americans deserve a chance to enjoy the results of their labor and have a stake in where they work.  Families and communities both benefit from strengthening employee ownership.   Please support and pass the bipartisan retirement security legislation that’s been carefully negotiated by Congress.

Thank you for your support.

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