President Trump signed the Retire through Ownership Act on October 15, adding a new valuation safe harbor to the federal law that governs employee stock ownership plans, known as ESOPs. The law lets a plan’s fiduciary rely in good faith on an outside appraiser’s price for company stock that no exchange quotes. It sets no dollar amount and sends no payment to anyone, but it changes who can be blamed when a share price is challenged.
What the new law lets an ESOP fiduciary do
The White House announced the signing on Thursday, October 15, 2026, along with two unrelated bills: one on Crow Tribe water projects in Montana and one on testing the origin of seafood. It describes the bill, S. 2403, as a measure that amends the Employee Retirement Income Security Act of 1974, called ERISA, “to provide a definition of adequate consideration for certain closely held stock.”
The enrolled bill text changes section 3(18) of ERISA, the part of the law that defines adequate consideration. Closely held stock is stock in a company whose shares are not traded on a public market, so no daily quote exists to say what a share is worth. A person has to put a price on it.
The new language says a fiduciary of an ESOP may rely in good faith on a valuation from an independent valuation expert or business appraiser. The appraiser has to follow the principles of IRS Revenue Ruling 59-60, as the IRS amends them over time. That ruling is the long-standing framework for valuing closely held businesses.
Does the law change what company stock in an account is worth?
Not directly. The safe harbor governs how a price is set and defended. It does not order a higher or lower price, and the law contains no formula that moves any account balance. People whose ESOP account holds shares of their employer still see a balance that follows the appraised value of the company.
What changes is the protection around the appraisal. A fiduciary who hires a qualified outside appraiser and relies on the result in good faith now has a statutory basis for that reliance. Before, the law left that standard open, which is the ambiguity the bill’s backers wanted removed.
Retirement deadlines, in your inbox: Miss an enrollment or claim deadline and the money can be gone. The Retirement Money Brief keeps you ahead of the ones that matter, every weekday.
Get the Retirement Money Brief →
We may earn a commission from links on this page.
The limits written into the bill
The bill text lists three things the safe harbor does not do. It does not stop the Secretary of Labor from issuing rules that interpret the provision through the usual notice-and-comment process under the Administrative Procedure Act. It does not expand the Secretary’s authority over “adequate consideration” beyond what existed the day before enactment.
The third limit matters most to participants. The safe harbor does not change a fiduciary’s obligations under section 404 of ERISA, the section that sets the duties of prudence and loyalty. A fiduciary cannot hire any appraiser and stop asking questions. The reliance has to be in good faith, and the appraiser has to be independent.
The change is also not retroactive. The amendments apply to determinations made on or after the date of enactment, which the White House puts at October 15. A valuation made before that date is judged under the old rules.
Why Congress took it up, and who backed it
The bill was introduced in July 2025 by Senators Roger Marshall, a Kansas Republican, and Tim Kaine, a Virginia Democrat, according to the trade publication PLANADVISER. The Senate passed it unanimously in October 2025. The House followed in September 2026 by a vote of 401 to 14.
The trade press describes valuation uncertainty as a source of lawsuits against companies that run ESOPs. Representative Tim Walberg, a Missouri Republican who chairs the House Committee on Education and the Workforce, said that “lack of clarity in the law has brought uncertainty and created legal grey areas.” The new standard is meant to replace that uncertainty with one framework.
The Senate sponsors and the House committee chair come from both parties, and the vote margins show it. The bill’s own text, though, speaks only to valuation. It says nothing about tax treatment or about how a plan is formed.
What participants can still ask about their own plan
The Labor Department’s Employee Benefits Security Administration oversees ESOPs and other plans under ERISA. Its website lists proposed rules on other subjects, such as electronic disclosure and fiduciary duties in choosing plan investments, but none on ESOP valuation. The agency has not announced any rulemaking tied to the new law.
Participants who want to know how their plan’s stock is priced can ask the plan administrator who the independent appraiser is and when the last valuation was done. That is a question about the process the new law now protects. EBSA takes participant questions at 1-866-444-3272 and through an online message form on its site.
For someone whose retirement savings sit largely in employer shares, the valuation question has a second side. The appraised value also sets how much a distribution is worth when the shares are cashed out, and the account is only one piece of the withdrawal picture alongside any IRA or 401(k).
The law does not address that side at all. It leaves open the question participants care about most: whether the price on their statement holds up when the company is sold or the shares are paid out. Only the plan’s own appraisal and the Labor Department’s future rules can answer that.
Is your retirement money tied up in employer stock?
A balance held in employer shares still has to come out of the plan some day, and the order in which accounts are tapped decides how much tax follows. Getting that order wrong is easy when one account is priced by an appraiser and the others by the market.
The Retirement Tax & Withdrawal Planner sets out the account withdrawal order, and it includes four calculators covering provisional income, the IRMAA tier, the RMD schedule and the Roth bracket fill. Part 6 walks through the spending order across accounts.
Get the account withdrawal order and four calculators in the Retirement Tax & Withdrawal Planner →
More Financial Reading
- 21 Ways to Stretch a $2,087 Social Security Check
- 15 Places to Find Your Share of the $4.25 Billion States Give Back
- The New $6,000 Senior Deduction and 14 More Tax Moves for Retirees
This article was produced with AI assistance and edited for accuracy against the sources linked above.
