If your retirement savings sit in an employee stock ownership plan, your account balance is not set by a market quote. It is set by an appraisal. Roughly 15.1 million Americans participate in the 6,609 ESOPs on file with the Labor Department, holding over $2 trillion in assets — and for the 5,993 privately held companies among them, an appraiser's annual opinion is the price at which shares go into your account and the price at which they are bought back when you leave.
A bill now sitting on the President's desk changes who bears the legal risk for that number. It is narrower than the headlines suggest.
What the Retire through Ownership Act Does
S. 2403 amends ERISA's definition of "adequate consideration" in Section 3(18). Under the new language, an ESOP fiduciary "may make a good faith reliance on a valuation provided by an independent valuation expert or business appraiser" that has relied on the principles and methodologies of IRS Revenue Ruling 59-60 — the 1959 ruling that remains the bedrock framework for valuing closely held stock.
That matters because an ESOP's purchase of employer stock is a prohibited transaction unless the plan pays no more than adequate consideration. For decades, trustees argued about what that phrase required for a company with no public market. The bill supplies a statutory answer.
The Clause That Narrows It
Read further and the bill limits itself three ways. It does not preclude the Labor Secretary from issuing regulations interpreting the new language. It does not expand the Secretary's authority over "adequate consideration" beyond what existed the day before enactment. And — most consequentially — it "shall not be interpreted to... modify a fiduciary's obligations under section 404."
ERISA Section 404 is the duty of prudence and loyalty. It is the provision under which ESOP valuation disputes are most often litigated. So the Act addresses the adequate-consideration gate while expressly leaving the prudence duty intact. A trustee who accepts an appraisal without scrutiny has not been handed immunity.
Note also what the statute does not do: it never defines "independent valuation expert or business appraiser." No credential, license, or professional standard is specified in the text.
The Effective Date Is Still Open
The Act applies only to valuation determinations made on or after the date of enactment — so the enactment date governs which appraisals are covered.
That date does not exist yet. The Senate passed S. 2403 by unanimous consent on October 9, 2025; the House passed it 401–14 on September 16, 2026; and the bill was presented to the President on October 5, 2026. As of this writing, that remains the last recorded action. Under Article I, Section 7, the President has ten days (Sundays excepted) from presentment to sign or return a bill — a clock that began October 5. Until it resolves, this year's appraisal may fall on either side of the line.
Practical Takeaways
- Know your diversification right. Under IRC 401(a)(28), a "qualified participant" — age 55 with 10 years of plan participation — may generally direct the investment of at least 25% of their account, rising to 50% in the final year of a six-year election period, with elections made in a 90-day window after each plan year closes. Many participants never use it.
- Read the annual valuation, not just the balance. Request the summary plan description and ask how the appraiser is selected and how often the valuation is updated.
- Treat concentration as the primary risk. Your job and your retirement account depend on the same employer. Diversification rights exist for that reason.
- Do not assume the new standard protects you. It shifts a trustee's defense on one prong; your plan's prudence obligations are unchanged.
Sources: S. 2403 (119th Congress), Retire through Ownership Act — Enrolled Bill, U.S. Government Publishing Office; Congress.gov Bill Status, S. 2403 — official action list; NCEO — Employee Ownership by the Numbers (DOL Form 5500, 2023 plan year); IRS — Revenue Ruling 59-60, 1959-1 C.B. 237; IRS — ESOP Listing of Required Modifications and examination guidance on IRC 401(a)(28)