2025 Trends Report: POLICY OUTLOOK
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How Republican control inside the Beltway may affect retirement plan sponsors.
Retirement, long considered a bipartisan issue, will be on the table in 2025 in three ways that bear watching for plan sponsors—new reform bill provisions, reversing Biden-era rulemaking and debate over forcing more Roth contributions within workplace retirement plans.
Enter ‘SECURE 3.0’
Among the measures that could form the basis for a “SECURE 3.0” retirement bill include lowering the minimum contribution age for more retirement plans to 18 from 21, enhancing automatic enrollment and escalation plan features, and making it easier to include lifetime income in plans.
“Think of the next big reform as in the development stages, a bucket that we’re filling with proposals that’s maybe a quarter full,” says Chris Spence, TIAA’s managing director for federal government relations.
Another access point for lifetime income could come in the form of a proposed retirement “Q-PON,” or qualified payout option, that would require retirement plans to provide a menu of payout options for plan participants who are retiring—such as systematic withdrawals, guaranteed annuity income or managed payouts.
The Automatic IRA Act, one approach to increase access to workplace plans modeled on state-level programs, is unlikely to move ahead in a GOP-controlled Congress. It was reintroduced by a Democrat in 2024.
Think of the next big reform as in the development stages, a bucket that we’re filling with proposals that’s maybe a quarter full.
— CHRIS SPENCE
TIAA managing director for federal government relations
ERISA rulemaking and ‘Rothification’
An embattled U.S. Labor Department rule to protect retirement savers—officially the Retirement Security Rule—looks sunk in 2025. The rule redefines who qualifies as a fiduciary under ERISA and would cover one-time recommendations such as retirement plan rollovers. Implementation has been delayed because of court rulings, and many assume it will be invalidated. The Trump administration could simply stop defending the rule in court and then decline to appeal, ensuring its demise.
Meanwhile, a top GOP priority is extending 2017’s Tax Cuts and Jobs Act and doing so could cost upward of $4.5 trillion. If 2017 is prologue, fiscally conservative Republicans may discuss covering some of the tab by forcing more 403(b) and 401(k) contributions to be made on a Roth, or after-tax, basis.
In focus is the upfront tax deduction employees get when they contribute to a traditional workplace retirement plan, which is among the most generous tax incentives in the U.S. tax code. Traditional contributions generally aren’t taxed before money is withdrawn. Roth contributions are subject to ordinary income tax.
In 2017, Republicans discussed capping annual pre-tax contributions and requiring any additional contributions to be made on a Roth basis. The proposal was controversial and ultimately excluded. But a provision of 2022’s SECURE 2.0 Act required higher-income participants to make catch-up contributions on a Roth basis. Employers must retool their plans by 2026 to accommodate the change, and future debate around “Rothification” could include new requirements.
Is lifetime income poised for the main stage?
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