Home Finance Cardin, Portman introduce bipartisan legislation to encourage retirement savings

Cardin, Portman introduce bipartisan legislation to encourage retirement savings

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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.”

Industry estimates place the number of employee stock ownership plans at more than 6,500 serving more than 14 million participants.

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The Promotion and Expansion of Private Employee Ownership Act will:

● 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. 

Cardin and Senator Pat Roberts (R-Kan.) introduced similar legislation in January 2019.

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