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 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 future needs, including retirement,” Senator Roberts said. “The more we do to help people save, the more resources are freed to make critical investments, particularly those that grow jobs and help the economy.”
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.
A similar bipartisan bill, H.R. 2092, was introduced by House Ways and Means Committee members Dave Reichert (R-Wash.) and Ron Kind (D-Wis.).
Original cosponsors of the bill include Senators: Baldwin (D-Wis.), Blunt (R-Mo.), Brown (D-Ohio), Cantwell (D-Wash.), Casey (D-Penn.), Collins (R-Maine), Crapo (R-Idaho), Franken (D-Minn.), Gillibrand (D-N.Y.), Grassley (R-Iowa), Isakson (R-Ga.) Klobuchar (D-Minn.), Moran (R-Kan.), Portman (R-Ohio), Risch (R-Idaho), Stabenow (D-Mich.), Tester (D-Mont.), Thune (R-S.D.), and Whitehouse (D-R.I.).
Senators Cardin and Roberts are members of the Senate Committee on Finance.