Employee Ownership Fairness Act of 2026
Sponsored By: Representative Perry, Scott [R-PA-10]
Introduced
Summary
Protect ESOP ownership while preserving retirement-savings limits. The Employee Ownership Fairness Act of 2026 would create ESOP-specific rules in ERISA and the tax code so employer stock contributions and loan-repayment contributions do not count against contribution or annual-addition limits, and so forfeitures allocated to ESOP accounts are excluded from annual additions.
Show full summary
- Workers and ESOP participants: ESOP participants would be able to receive the full benefit of employer stock and contributions that repay ESOP acquisition loans without those amounts reducing their ability to accrue other retirement benefits. This aims to strengthen the value of ownership inside ESOPs.
- People saving in other defined contribution plans: The bill would force separate application of section 404 limits to an ESOP and to any other defined contribution plan. That helps prevent ESOP contributions from crowding out 401(k) or similar plan contributions.
- Employers and plan administrators: Plans would need new tracking and testing rules because ESOP contributions, loan repayments, and forfeitures get special treatment. The changes would apply to plan years beginning after enactment.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
More retirement contributions for ESOPs
If enacted, this bill would change how employer contributions to employee stock ownership plans (ESOPs) are counted for certain retirement limits. For plan years beginning after the date of enactment, employer stock contributions and contributions used to repay loans that bought employer securities would not be counted when determining annual additions under section 415(c)(2)(A) and for certain contribution-counting rules under section 404(a)(3)(A). Forfeitures allocated to ESOP accounts would also be excluded from annual additions. If you are in an ESOP, your plan could receive larger employer-provided retirement credits without those amounts using up other contribution room.
Separate contribution limits for ESOPs
If enacted, this bill would require employers to apply employer contribution limits separately to an ESOP and to any other defined contribution plan they maintain. For plan years beginning after the date of enactment, an employer with both an ESOP and other plans would figure section 404 limits separately for the ESOP and for each other defined contribution plan. This would let employers add more to one plan without reducing the allowed amount in the other. The rule applies only to plans that meet the ESOP definition in the tax code.
Sponsors & CoSponsors
Sponsor
Perry, Scott [R-PA-10]
PA • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov