HomeLife InsuranceOn Taxes and Retirement, Here's What Could Change in 2025

On Taxes and Retirement, Here’s What Could Change in 2025


That said, “the moment tax reform is on the table, everything is on the table. In order to pass the reconciliation bill, they must generate sufficient revenues to meet the agreed upon net number. This is where surprises can appear,” Bush pointed out.

Retirement Policy

While Secure 2.0 regulatory guidance is anticipated next year, the Labor Department’s fiduciary and ESG rules put forth under the Biden administration “are natural focal points for the incoming administration and Congress,” said Mark Iwry, the former head of national retirement policy during the Obama-Biden administration, who’s now a nonresident senior fellow at the Brookings Institution in Washington.

Groom Law Group attorneys noted on a recent webcast that among the Secure 2.0 changes anticipated next year are projects such as the retirement “lost and found” registry, savers match and portability studies.

Catch-up contribution changes and part-time employee rules are also expected in early 2025, the lawyers said.

Iwry noted that two major factors should “limit the impact” of the presidential transition on Secure 2.0.

First, the law “was famously bipartisan, largely because much of it was proposed by and for industry stakeholders,” Iwry said.

Second, “plan sponsors and their advisors, recordkeepers and other service providers need predictability, stability, and ready ways to minimize compliance risk. That generally translates to a desire for timely and practical regulatory guidance on key issues, such as questions of interpretation under 2.0,” Iwry relayed.
 
“At the same time, when the election changes the party controlling the White House, the new administration’s OMB does not wait much past noon on Inauguration Day to issue its temporary freeze of regulatory actions that are in the pipeline,” Iwry continued.

The freeze “can be accompanied by a clawback warning that the incoming administration will not necessarily stand by prior management’s administrative positions, especially in recently issued guidance. Some incoming administrations have also targeted recent final guidance for administrative revocation or amendment, in addition to the threat of retroactive invalidation under the Congressional Review Act,” Iwry added.

“For example, Secure 2.0 requires most new and recently adopted 401(k) plans to use auto enrollment and auto contribution increases starting in 2025,” Iwry said. “Treasury and IRS guidance answering a few interpretive questions about this is pending.”

Also, “Rothification of catch-up contributions for participants above the specified wage level will be required right after the end of 2025 per that two-year deferral of effective date,” Iwry said. “Guidance on some outstanding questions is in the works but not issued yet.”

Secure 2.0 was enacted Dec. 29, 2022, with a Jan. 1, 2024 effective date for requiring catch-up contributions to be made in Roth form only.

Secure 2.0 gave the industry one year “to prepare to implement that change,” Iwry said.

“In mid-2023, Treasury yielded to industry’s pleas for more time to adjust systems to implement this change, and deferred the deadline for implementing the change by two years — until the start of 2026,” Iwry said.

Treasury “also promised guidance along the way that would answer a number of questions about how to implement. That guidance is still pending. It is uncertain how soon it will be issued,” that is, it might be issued before year-end, or before Jan. 20, 2025, Iwry relayed.

What Next at the SEC

Securities and Exchange Commission Chairman Gary Gensler may make a quick exit, before inauguration day, according to attorneys at Arnold & Porter.

Gensler’s term expires in 2026, but “it is not likely he will continue beyond inauguration day in January 2025 — whether he follows in the footsteps of his predecessor, Jay Clayton, and departs as early as December 2024, or stays until closer to the inauguration like other past chairs is an open question,” the attorneys said in a recent brief.

Even with Republican control of both the White House and Senate, “it may take several months into the new Trump administration before a new SEC chair is nominated and confirmed,” the attorneys write.

During that time, President-elect Trump “presumably will designate an acting chair from the two current Republican commissioners, Hester Peirce or Mark Uyeda, with Peirce seeming more likely given her seniority.”

Peirceand Uyeda, as well as former SEC Commissioner Dan Gallagher, have been among the names floated as possible replacements for Gensler.

DOGE

Meanwhile, Trump’s planned Department of Government Efficiency (DOGE), to be headed by Elon Musk, will serve “as an advisory body to the Trump administration, rather than a newly established federal agency,” according to analysts at Raymond James.

“This distinction is important as advisory bodies cannot make or enforce regulations, can only provide recommendations from outside of government, and do not have either government funding or staff,” the Raymond James analysts said.

“While DOGE can make recommendations to the White House on potential areas for cost-cutting, its influence will depend on the Trump administration’s, and in many cases Congress’, willingness to act,” the analysts said.