Post-SECURE 2.0 New DOL ESOP Valuation Guidelines

by Prof. Robert Bloink and Prof. William H. Byrnes

Employee stock ownership plans, or ESOPs, can provide valuable retirement benefits to employees—in addition to an ownership stake in their employer. Still, ESOPs have always been risky due to fiduciary concerns over how the employer stock should be valued when acquired by the ESOP. The SECURE Act 2.0 directed the Department of Labor (DOL) to provide updated guidance on how responsible parties should determine whether an ESOP was acquiring employer stock for “adequate consideration”—and the DOL answered with a notice of proposed rulemaking (NPRM) in 2025. Ultimately, the DOL proposal fell victim to President Trump’s regulatory freeze. Still, because key aspects of the NPRM reflect the results of court decisions on ESOP valuation over the years, the 2025 DOL guidance may remain the most valuable tool currently available to help ESOPs avoid court intervention when acquiring employer stock.

ESOPs: Background