What the Retire Through Ownership Act Means for ESOPs
President Donald Trump signed the Retire Through Ownership Act into law on October 15, 2026, clarifying how privately held company stock is valued in employee stock ownership plans (ESOPs).
The bipartisan legislation addresses a longstanding source of uncertainty for ESOP trustees and business owners. By clarifying the standards for relying on independent valuations, the law supports the continued growth of employee ownership and gives business owners the confidence to consider an ESOP as part of their succession planning.
How the New Law Protects ESOP Companies, Sellers and Trustees
The Retire Through Ownership Act establishes a clearer framework for ESOP fiduciaries to rely in good faith on qualified, independent valuations of privately held company stock. The change addresses longstanding uncertainty around the federal adequate consideration standard while preserving fiduciary responsibilities.
The Economic Impact of Employee Ownership
Today, more than 6,600 ESOPs cover approximately 15 million participants and hold more than $2 trillion in retirement plan assets.
Research shows measurable benefits for employee-owned companies and their employees:
- 6%–6.7% higher labor productivity following ESOP adoption, according to Rutgers University research.
- 92% greater median household wealth among employee-owner households compared with similar workers, according to the National Center for Employee Ownership.
- 3–4 times greater employee retention during COVID-19 compared with non-ESOP companies, according to the Employee Ownership Foundation.
These results reflect the broader impact of employee ownership:
- Business owners gain liquidity while preserving their company’s legacy.
- Employees build retirement wealth without investing their own savings to acquire company stock.
- Companies can benefit from stronger productivity and workforce stability.
- Communities retain locally owned businesses and quality jobs.
Exploring an ESOP for Your Business?
If you are evaluating an ESOP or beginning to plan an ownership transition, our team can help you understand what is possible and how to structure the right path forward.
Connect with Lazear to start the conversation.
About Lazear Capital Partners
Lazear is a nationally recognized investment banking and ownership transition advisory firm serving middle-market businesses. The firm specializes in Employee Stock Ownership Plans (ESOPs), proprietary Section 1042 tax strategies, and mergers and acquisitions.
Since 1999, Lazear has advised on more than 350 ownership transition transactions and expanded to 19 locations nationwide. Through its multidisciplinary team of CPAs and CFA Charterholders, attorneys, valuation professionals, and transaction advisors, Lazear helps business owners maximize value while preserving their legacy.
To learn more, visit www.lazearcapital.com and follow Lazear on LinkedIn.
