Employee-Owned Companies Back Bill Allowing More 401(k) Adds

Employee-owned US companies are coalescing behind legislation that would allow them to allocate shares to workers without exceeding 401(k) contribution limits, addressing a tax code wrinkle that’s hampered an ownership model lawmakers want to grow.

A new bill introduced by Sen. Bill Cassidy (R-La.), head of the Senate’s labor and pensions committee, would amend federal tax guidelines to treat employee-stock ownership plans, or ESOPs, differently when the IRS calculates capped annual contributions workers use to save for retirement.

The legislation would stop forcing companies to withhold benefits or limit how much tax-deferred savings workers can put in their self-directed accounts ...