WASHINGTON – U.S. Senators Ben Cardin (D-Md.) and Pat Roberts (R-Kan.) today introduced legislation to encourage retirement savings by fostering the growth of S corporations that are owned by Employee Stock Ownership Plans (“S-ESOPs”).
Through changes to the tax code and educational outreach to companies, the bipartisan Promotion and Expansion of Private Employee Ownership Act would eliminate barriers that businesses and their owners currently face in establishing a new S corporation ESOPs or expanding the employee-ownership stake in an S corporation.
“Americans deserve the opportunity to build secure retirement savings. S-ESOP companies have proven resilient even in tough times while providing an effective means of retirement savings for their workers,” said Senator Cardin. “We need to preserve and expand this structure to enable more businesses to grow and to allow employees to accrue these valuable benefits.”
“The legislation will encourage employees to save for retirement,” Senator Roberts said. “And, participants in ESOPs have been found to be more productive employees because they have an interest in company growth. Our bill promotes this mutually beneficial relationship for both employees and businesses.”
Industry estimates place the number of employee stock ownership plans at more than 6,500 serving more than 14 million participants.
The Promotion and Expansion of Private Employee Ownership Act also provides an important protection for small businesses by ensuring that they continue to qualify for Small Business Administration (SBA) loans, contracting assistance, or business development programs after they are converted to ESOPs. The technical change in the law allows the business to maintain its status as minority-owned, woman-owned, veteran-owned, or otherwise qualify for specific programs within SBA that are dependent on the nature of the ownership.
Original cosponsors of the bill include Senators: Baldwin (D-Wis.), Cantwell (D-Wash.), Casey (D-Penn.), Collins (R-Maine), Coons (D-Del.), Crapo (R-Idaho), Duckworth (D-Il.), Ernst (R-Iowa), Hoeven (R-N.D.), Isakson (R-Ga.) Klobuchar (D-Minn.), Leahy (D-Vt.), Moran (R-Kan.), Murray (D-Wa.), Peters (Mich.), Portman (R-Ohio), Reed (D-R.I.), Risch (R-Idaho), Stabenow (D-Mich.), Tester (D-Mont.), Thune (R-S.D.), Tillis (R-N.C.), Van Hollen (D-Md.) and Whitehouse (D-R.I.).
Senators Cardin and Roberts are members of the Senate Committee on Finance.