Sponsors (2)
The bill increases predictability for ESOP fiduciaries and plan sponsors by endorsing a specific IRS valuation approach and limiting agency expansion, but it risks higher valuations, reduced appraisal scrutiny, and potential mispricing that could raise costs for buyers and plan participants.
ESOP fiduciaries, plan sponsors, and small-business owners can rely on independent valuations using IRS Revenue Ruling 59-60 methods, reducing legal uncertainty and the risk of fiduciary litigation when valuing closely held company stock.
Plan participants (middle-class families) retain existing protections because the bill clarifies the safe harbor does not alter ERISA §404 fiduciary duties.
Plan sponsors and financial institutions gain predictability because the bill confirms it does not expand the Secretary of Labor’s authority, limiting potential regulatory overreach.
Small-business buyers and ESOP participants may face higher transaction costs because the safe harbor could be used to justify higher valuations of closely held stock.
Taxpayers and financial institutions could see reduced effective oversight because relying on Rev. Rul. 59-60 may limit challenges to appraisals, potentially enabling imprudent fiduciary decisions and spawning litigation over whether fiduciaries acted prudently.
Small businesses and financial institutions handling complex transactions may face mispricing risks because tying the safe harbor to a historical IRS valuation framework may not reflect current valuation best practices.
Based on analysis of 2 sections of legislative text.
Amends ERISA’s definition of “adequate consideration” to create a limited safe harbor allowing fiduciaries of employee stock ownership plans (ESOPs) to rely in good faith on independent valuations or appraisers who used the valuation principles and methodologies in IRS Revenue Ruling 59‑60 when determining fair market value. The change also makes clear that the Department of Labor may still issue implementing regulations under the APA, that the amendment does not expand the Secretary’s regulatory authority beyond its pre‑existing scope, and that it does not change ERISA fiduciary duties under section 404. The safe harbor applies to valuations made on or after the law’s enactment.
Introduced July 23, 2025 by Roger Wayne Marshall · Last progress October 17, 2025