---
title: "Retire Through Ownership Act: ESOP Valuation in 2026"
description: "The October 2026 ESOP valuation amendment: verified enactment, good-faith reliance, continuing fiduciary duties and questions for a pending transaction."
canonical: "https://acquisitionstars.com/blog/retire-through-ownership-act-esop-valuation-2026"
author: "Acquisition Stars"
firm: "Acquisition Stars"
practice: "M&A and securities law"
office: "Novi, Michigan (serves clients nationwide)"
contact: "consult@acquisitionstars.com | 248-266-2790"
---

# Retire Through Ownership Act: ESOP Valuation in 2026

Acquisition Stars · Last updated October 20, 2026

The Retire Through Ownership Act became Public Law 119-124 on October 15, 2026, according to [GovInfo’s official bill-status record for S.2403](https://www.govinfo.gov/bulkdata/BILLSTATUS/119/s/BILLSTATUS-119s2403.xml). Owners with a pending ESOP sale should have specialist counsel assess the applicable valuation and fiduciary requirements before relying on earlier process descriptions.

## What does the enacted language address?

The [enrolled text](https://www.govinfo.gov/content/pkg/BILLS-119s2403enr/html/BILLS-119s2403enr.htm) addresses an ESOP fiduciary’s good-faith reliance on an independent valuation expert or business appraiser using Revenue Ruling 59-60 principles. It preserves section 404 obligations and applies the amendment to the specified determinations made on or after enactment. Read the complete text with qualified ESOP counsel; this is not a conclusion that a particular transaction meets its conditions.

## What still needs transaction-specific review?

Identify who performed the valuation, the assignment and relationships involved, which information was supplied, and the final economics of the sale. Ask the fiduciary’s counsel which duties, requirements and evidence apply to the actual decision. A reference to the Act in a proposal does not establish that these questions have been answered.

- Who is responsible for evaluating the independence and scope of the valuation work?
- Which valuation and decision dates are relevant?
- Does the analysis reflect final financing, seller-note and governance terms?
- Have material forecast or business changes been communicated?
- Which legal conclusions and remaining conditions are assigned to specialist counsel?

## What should a seller with a pending ESOP sale prepare?

Organize the valuation versions available, the information supplied, revised projections, proposed sale terms and outstanding adviser questions. Ask for a coordinated issues list so a change to price or financing is considered by the advisers whose work depends on it.

The owner’s contractual interests remain an important separate workstream: closing cash, deferred payments, disclosure, indemnification and a continuing role. The [seller-side M&A counsel page](https://acquisitionstars.com/services/esop-transaction-attorney) describes AS’s engagement scope and the coordination of specialized ESOP and tax counsel.

## How should older valuation guidance be read?

Separate a historical proposal, final rule, statute, case and settlement process agreement. Each has a different status and reach. Confirm the status and applicability of the authority before relying on it for a different transaction.

Use the [ESOP valuation preparation worksheet](https://acquisitionstars.com/blog/esop-valuation-adequate-consideration) to organize the records for adviser review. The [fiduciary-role guide](https://acquisitionstars.com/blog/esop-fiduciary-duties-dol-compliance) helps distinguish seller, company and trustee assignments.

## How does this fit the rest of the sale?

Keep valuation, financing, tax and sale-document questions together in the workplan while assigning each professional’s responsibility. A legal development does not by itself supply the funds to close, resolve a seller-note payment restriction or establish the seller’s tax eligibility.

Return to the [ESOP seller planning pillar](https://acquisitionstars.com/blog/esop-transactions-legal-guide) for the full process, or use the [financing checklist](https://acquisitionstars.com/blog/esop-financing-seller-notes-warrants) before agreeing to deferred consideration.

## Define the proposed engagement

Seller-side M&A counsel for business owners evaluating or executing an ESOP transaction, with specialized ESOP and tax counsel coordinated where required.

Identify your role, the transaction stage, advisers involved, documents available and next deadline. Start with a non-confidential summary; arrange document sharing after intake. [Review the M&A engagement scope](https://acquisitionstars.com/services/esop-transaction-attorney) before requesting an assessment.

## Read the amendment in the order the transaction requires

### Begin with the enacted source and relevant determination

Use [GovInfo, Public Law 119-124, October 15, 2026](https://www.govinfo.gov/content/pkg/PLAW-119publ124/pdf/PLAW-119publ124.pdf) as the enacted source. Identify the provision being applied, the determination at issue and its date. A draft valuation, a revised report and a closing decision can occur at different times. Ask counsel which event matters to the statutory analysis and what evidence establishes that event.

Keep historical summaries labeled with their original dates. If an earlier article describes a proposal or prior agency approach, ask how that material relates to the enacted text and any other governing authority. A later retrieval date tells the reader when a source was accessed; the source’s actual publication and legal status remain separate facts. This distinction matters when several advisers have worked from different versions of the law or transaction.

### Identify the work on which reliance is proposed

The amendment concerns reliance on independent valuation work in the circumstances it specifies. Prepare the engagement description, the report or other work supplied, the professional’s relationships and the information used. Ask the responsible counsel how the assignment and independence will be evaluated and which questions remain for the fiduciary. The seller’s preferred price and an appraiser’s conclusion serve different roles in that review.

If information remains missing, record its source and who can provide it. Distinguish an unanswered factual request from an unresolved legal question. That separation gives the transaction team a practical way to progress: management can respond to an information request while the relevant professional considers the significance of the response. Document which report version incorporates the updated information and who received it.

### Keep section 404 and sale-document work visible

The enacted text preserves section 404 obligations. Ask fiduciary counsel to explain the continuing duties for the actual functions performed and decisions made. A short description of the reliance provision leaves the transaction-specific process and other applicable requirements to be addressed. The seller should know which specialist has accepted that work and which open matter could affect the intended timetable.

Separately, review the owner’s purchase agreement, disclosure schedules, note and continuing-role documents. The statutory development leaves those contractual choices to be negotiated and documented. A seller may still need to decide whether a payment restriction, indemnity term or employment obligation fits the intended exit. Connect those decisions with the financing and valuation workstreams so the final documents describe a consistent transaction.

## Which records make the valuation review concrete?

The Act expressly refers to Revenue Ruling 59-60 principles and methodologies. The IRS reproduces the ruling in [Appendix A to its valuation reference, October 29, 2014](https://www.irs.gov/pub/irs-lbi/S%20Corporation%20Valuation%20Job%20Aid%20for%20IRS%20Valuation%20Professionals.pdf#page=22). The surrounding job aid states that it supplies reference material rather than an official legal position; distinguish the reproduced ruling from the job aid’s separate analysis. Have the valuation professional and specialist counsel identify the authorities applicable to the actual assignment.

### Explain the business behind the forecast

The ruling’s factors include business history, industry conditions, financial position, earning and dividend-paying capacity, intangible value, stock transactions and comparable traded companies. Those subjects call for underlying records. A forecast spreadsheet leaves the appraiser to ask what supports a new customer, higher margin or changed management cost. Supply the relevant agreement, management explanation or operating record, and identify a contingent expectation as such.

For an owner preparing to step away, explain who will perform the departing owner’s work and which compensation or operating costs the forecast assumes. If a business depends on a relationship held by that owner, identify how the proposed transition addresses it. These are practical questions for the information handoff, rather than a formula for an appraised price. The professional must evaluate the actual evidence and the significance of any continuing uncertainty.

### Describe the shares and proposed financing precisely

Identify the ownership interest being valued, its rights and restrictions, and the related capitalization record. Compare the report’s assumptions with the proposed purchase agreement, debt documents, seller note and retained-equity terms. A shared headline price can conceal different obligations or priorities. Ask which report assumptions would need reconsideration if the lender changes a payment restriction or the parties revise a continuing seller right.

For a partial sale, distinguish the shares being transferred from those the seller will retain. Keep voting, distribution and transfer provisions visible in the relevant governing documents. The owner needs to understand the rights actually received or retained and which adviser has evaluated each issue. Refer those questions to the valuation professional, fiduciary counsel and seller counsel according to their separate assignments.

| Input | Material to identify | Question for the assigned professional |
| --- | --- | --- |
| Operating history | Financial statements, material customer records and explanations of unusual items | Which historical results inform the earning-capacity analysis? |
| Forecast | Management assumptions, contracts supporting growth and expected replacement costs | Which assumptions are documented, contingent or inconsistent with current operations? |
| Ownership rights | Capitalization, share classes, governing documents and transfer restrictions | What particular interest is being valued? |
| Transaction financing | Borrowing proposal, seller note, proposed payment blocks and final funds flow | Does the report address the economics the parties actually intend to sign? |
| Changes before the determination | New business information or revised transaction terms since the report’s preparation | What further review is needed before the fiduciary makes the relevant decision? |

### Keep an appraisal conclusion separate from an owner’s instruction

An owner may be willing to accept less cash at closing in exchange for deferred proceeds or continued ownership. Explain that commercial objective to seller counsel, along with the proposed documents. The fiduciary and its advisers must address their own applicable responsibilities. Keep the owner’s negotiation instruction and the fiduciary’s valuation-related determination identifiable even when both rely on the same business information. That distinction helps the parties address a disagreement about terms without presenting one adviser’s work as advice to every participant.

## Questions before the documents are signed

### When did the Retire Through Ownership Act become law?

The official GovInfo bill-status record for S.2403 identifies October 15, 2026 and Public Law 119-124.

### Does the Act eliminate ERISA section 404 duties?

The enrolled text expressly preserves section 404 obligations. Specialist counsel should evaluate the applicable duties and the scope of reliance for the actual decision.

### Does a reference to the Act establish that my sale complies?

No. Identify the valuation work, independence, applicable dates, final terms and responsible specialist analysis for the particular transaction.

General information for planning a discussion with counsel. The appropriate structure and documents depend on the parties, governing law and transaction. An assessment request does not create an attorney-client relationship.

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Source: https://acquisitionstars.com/blog/retire-through-ownership-act-esop-valuation-2026

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