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Testimony by The ESOP Association to Senate Committee Roundtable on Small Business Tax Reform (PDF)

Presented to a roundtable sponsored by the U.S. Senate Committee on Small Business and Entrepreneurship. Excerpt: "In terms of ... [tax code] provisions that ... should be seriously considered, here are a few ...: [1] An S corporation like a C corporation should be able to pay 'dividends' in cash to employees in the ESOP, and the employees of course would pay tax at that time to Uncle Sam on the dividends; [2] Congress basically repealed in 1989, a law adopted in 1984 that encouraged lenders to make loans to create ESOPs, by permitting the lender to exclude 50% of its interest income from its income; [3] There was for a time a variety of tax laws that encouraged estate planning of owners of private businesses to pass along in their wills ownership to the ESOP, and the ESOP would take on the responsibility for paying the estate tax."

The ESOP Association Provides Model Regulation Language for DOL Rulemaking Defining Adequate Consideration

"The ESOP Association's model rule is intended to ensure ESOP fiduciaries, plan sponsors, service providers, and parties transacting with ESOPs are able to satisfy ERISA's obligations, thereby adequately protecting ESOP participants' interests while encouraging retirement security through new ESOP formation. This regulatory certainty will encourage companies and their shareholders to establish new ESOPs and reverse the years-long deceleration in the growth of employee ownership, which has been driven largely by the current nebulous statutory standard."

The ESOP Association Files Amicus Brief in Citigroup ERISA Litigation (PDF)

45 pages. "On March 25, 2010, The ESOP Association filed an Amicus Brief in the Citigroup ERISA litigation. The case is currently on appeal from the U.S. District Court for the Southern District of New York. The Association is asking the court to affirm the district court ruling that the defendants are not liable for breach of fiduciary duty."

ESOP Association Petition for Notice-and-Comment Rulemaking Regarding the Definition of 'Adequate Consideration' Under ERISA Section 408(e) (PDF)

26 pages. "After nearly 50 years, it is time for the Department to end its procedurally improper, retroactive approach to policymaking and engage with stakeholders in a notice-and-comment rulemaking process as Congress originally intended. It is not only The ESOP Association and its members that recognize this fact; both the House and Senate recently passed bipartisan legislation that would require the Department to provide formal guidance on the adequate consideration exemption." [Also available: Fact Sheet]

ESOP Association Comment Letter to the House Ways and Means Committee's Pensions and Retirement Tax Reform Working Group: ESOP Policy and Regulation (PDF)

"Thirty-five plus years of data by reputable experts in retirement savings is very convincing that ESOPs provide, in the vast majority of instances, assets that are better than other employer sponsored retirement plans.... [D]ata in some instances have the average ESOP account balance at nearly $200,000 per participant compared to the $75,000 range of other defined contribution plans." [Editor's note: includes a detailed summary of ESOP history and supportive tax policy.]

ESOP Association's Statement to Subcommittee on Health, Education, Labor, and Pensions fpr July 26, 2011, Hearing on 'Redefining 'Fiduciary' (PDF)

With regard to incorrect valuations of private company ESOP stock, the Association acknowledges and shares the DOL's concern but questions whether the problem is as widespread as the DOL implies. The Association has not heard significant numbers of complaints from its corporate or fiduciary members about incorrect ESOP valuations.

ESOP Association Comment Letter to Pension/Retirement Tax Reform Task Force of the House Ways and Means Committee

"[E]mployees of employee stock owned companies were four times less likely to lose their jobs during the Great Recession than those in conventionally-owned companies. Clearly, these men and women working for employees stock owned companies, primarily ESOP companies, still had their retirement savings intact, still received additions to that retirement savings pot of assets on a 4 to 1 ratio compared to other men and women working in non-ESOP companies."

ESOP Association Amicus Brief Argues That DOL Has Been Misinterpreting the Adequate Consideration Exemption

"The brief supports an award of attorneys' fees and costs against the [DOL] on the basis that the DOL has been taking unreasonable positions on ERISA's 'adequate consideration' exemption. [The authors] discuss the issue in the appeal and some of the points raised in the amicus brief." [Walsh v. Bowers, No. 22-15738 (9th Cir. amicus brief filed Jul. 27, 2022)]

Summary of Provisions of S. 1612, the ESOP Promotion and Improvement Act of 2009 (PDF)

1 page. Excerpt: [Two provisions are as follows:] S. 1612 would repeal the punitive 10% penalty tax on S corporations distributions from current earnings, also referred to as dividends, placed on the distributions from current earnings that are passed through to ESOP participants in cash. S. 1612 would clarify that dividends paid by C corporations on ESOP stock are not a preference item in calculating the corporate alternative minimum tax.

A Deeper Dive: Comparing the Expanding ESOPs Principles vs. The Short Term Equity Plan (STEP) Proposal

"Pete Stavros, founder of Expanding ESOPs, shared ... a much more detailed public policy proposal with the ultimate aim not to promote ESOPs as we know them today, but to convince Congress to create a new type of qualified retirement plan under [ERISA] and to call them ESOPs. ... TEA agrees with some of the issues Expanding ESOPs highlights in its principles. However, the detailed STEP policy proposal is the wrong solution if the true goal is employee ownership and building retirement wealth for employee owners."