Washington, DC – U.S. Senator Ben Cardin (D-MD), along with fellow Finance Committee members Senator Pat Roberts (R-KS) and Senator Olympia Snowe (R-ME), have 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 of 2011 (S. 1512) would eliminate barriers that businesses and their owners currently face in establishing a new S corporation ESOP or expanding the employee-ownership stake in an S corporation.
“S-ESOPs have proven resilient even in tough times — hiring new workers as other firms were shrinking—while also 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 their employees to accrue these valuable benefits. Americans deserve the opportunity to build secure retirement savings; far too many hard-working individuals are left with serious questions about their future economic security.”
“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 in investments that grow jobs and help the economy.”
Senator Olympia J. Snowe said: “These types of positive incentives are an incredible motivator of employees, and in the face of looming tax reform, it is important for Congress to change these provisions now so they are not forgotten in larger tax reform or, worse, changed in some other, less favorable way. Implementing these reforms now will also afford small businesses and their employees a degree of certainty regarding their financial futures in what has been an extremely tumultuous economic environment.”
The Promotion and Expansion of Private Employee Ownership Act of 2011 also provides an important protection for small businesses by ensuring that they continue to qualify for Small Business Administration’s loan, 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 bill, currently endorsed by 18 Republicans and 18 Democrats, was introduced earlier this year in the House of Representatives as H.R. 1244.