insights - all things legal

How employer stock must be valued when an ESOP buys it, and where the rules stand today

An ESOP lets the owner of a closely held business sell the company to its employees through a retirement trust — but because the plan buys stock from insiders, ERISA permits the purchase only for no more than "adequate consideration." In January 2025 the Department of Labor finally proposed regulations defining that term, along with a class exemption for an ESOP's initial acquisition of employer stock — and then withdrew both before they were ever published. This article explains the adequate consideration requirement, the guidance that fills the regulatory gap, and what the withdrawn proposals would have changed.