In a new, Republican-controlled Congress, retirement policy will likely take a back seat to other party priorities, such as implementing tax cuts and confirming cabinet nominations, though lawmakers will continue their focus on cryptocurrency and investment restrictions in China, sources said.
A key focus for Republicans next year is extending provisions from the 2017 Tax Cuts and Jobs Act, which President-elect Donald Trump signed into law during his first term. The legislation’s provisions expiring at the end of 2025 mostly impact individuals, such as increasing the standard deduction and child tax credit, though Trump also called for further reducing the corporate tax rate to 15%, from 21%, during his campaign.
Working to extend those tax cuts is “going to take a lot of oxygen out of the room,” and limit the ability for other legislative activity, said Melissa Kahn, managing director of retirement policy for the defined contribution team at State Street Global Advisors.
Kahn also noted that Republicans will focus on confirming Trump’s cabinet nominations early next year, which would take up further time, in addition to the likelihood that lawmakers will need to address government funding. Cabinet picks coming from Congress are expected to further damage the small margin for House Republicans, who won 220 seats in the November election compared to Democrats' 215.
Currently, Congress is working to pass a temporary government funding bill, which would likely keep the government funded until March 2025. Lawmakers must pass such a measure by Dec. 20 in order to avoid a government shutdown.
That funding bill could serve as a vehicle for attaching legislation addressing technical errors in SECURE 2.0, the retirement security package Congress passed in 2022, noted Kendra Isaacson, principal at Mindset, a Washington-based public policy consulting firm.
If the legislation addressing errors — such as the omission of a subparagraph about catch-up contributions— doesn’t pass this year, it will likely be one of the first priorities for retirement legislation next year, according to Isaacson, who previously worked as the pensions policy director and senior tax counsel for Sen. Patty Murray, D-Wash., when Murray chaired the Senate Committee on Health, Education, Labor and Pensions.
There’s also potential for legislation to pass this year allowing 403(b) plans to offer collective investment trusts to participants, according to Kahn. The American Retirement Association recently launched a publicity and lobbying campaign asking Congress to approve legislation on that, known as the Retirement Fairness for Charities and Educational Institutions Act. If it doesn’t make it through Congress this year, “then we will make a renewed push next year,” Kahn added.