WASHINGTON – U.S. Senators Ben Cardin (D-Md.), Chair of the Senate Small Business Committee and a senior member of the Senate Finance Committee, and Rob Portman (R-Ohio), also a member of the Senate Finance Committee, today introduced the Promotion and Expansion of Private Employee Ownership Act—bipartisan legislation to encourage retirement savings by fostering the growth of S corporations that are owned by Employee Stock Ownership Plans (S-ESOPs). The bill would eliminate barriers that businesses and their owners currently face in establishing a new S-ESOP or expanding the employee-ownership stake in an S corporation.
“Americans deserve the opportunity to build secure retirement savings. S-ESOPs provide small business owners and workers with the opportunity to build retirement savings, and they have proven to be resilient even in tough times,” Senator Cardin said. “We need to preserve and expand this structure to enable more businesses to grow and to allow employees to accrue these valuable benefits.”
“S corporation ESOPs encourage and expand retirement savings by giving American workers the opportunity to keep more of the fruits of their labor,” said Senator Portman. “In a time where economic security is at the forefront of everyone’s minds, Congress must act to ensure that Americans are rewarded for their hard work and have every tool available to save for life after retirement.”
Industry estimates place the number of employee stock ownership plans at more than 6,500 serving more than 14 million participants.
- incentivize owners of S corporations to sell their stock to an ESOP by providing deferral treatment for contributions of S Corporation stock to an ESOP so long as certain reinvestment requirements are met;
- provide technical assistance for companies that may be interested in forming an S ESOP;
- ensure small businesses that become ESOPs retain their SBA certification; and
- affirm the importance of preserving the S ESOP structure in the Internal Revenue Code.
The bill is cosponsored by Senators Debbie Stabenow (D-Mich.), Mike Crapo (R-Idaho), Maria Cantwell (D-Wash.), Steve Daines (R-Mont.), Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Bob Casey (D-Penn.), Jim Risch (R-Idaho), Sheldon Whitehouse (D-R.I.), Roy Blunt (R-Mo.), Maggie Hassan (D-N.H.), John Boozman (R-Ark.), Patrick Leahy (D-Vt.), Deb Fischer (R-Neb.), Patty Murray (D-Wash.), Joni Ernst (R-Iowa), Bernie Sanders (I-Vt.), Amy Klobuchar (D-Minn.), Jon Tester(D-Mont.), Jeanne Shaheen (D-N.H.), Angus King (I-Maine), Cory Booker (D-N.J.), Gary Peters (D-Mich.), Chris Van Hollen (D-Md.) and Tammy Duckworth (D-Ill.).
Cardin and Senator Pat Roberts (R-Kan.) introduced similar legislation in January 2019.