Now’s the time: Trump, Congress need to expand retirement plan savings, says NYC Bar

“The Committee’s overall recommendations are that retirement policy continue to support the goals of increasing plan formation, plan participation, and retirement savings. We believe these goals are sufficiently important and that they should be implemented independently of the desire to fund future tax cuts or the Social Security system,” said Reinstein.

“American workers rely on employer-sponsored retirement plans to provide a secure income in their retirement years. Nevertheless, numerous studies have shown that retirement savings are falling short for many Americans, a large number of whom still lack access to an employer-sponsored 401(k) or other plan.”

The Committee sent nine recommendations to Senators Ron Wyden, Bernie Sanders, and House Representatives Tim Walberg, Robert Scott, Jason Smith and Richard Neal, which include:

Maintain stability in the tax rules: “From the point of view of employers as well as employees, tax rules governing tax-qualified retirement plans should encourage employers to establish and maintain plans and encourage employees to participate fully in such plans.” Frequent changes “frustrate plan sponsors by complicating the planning of compensation and benefits packages over the long term and increasing the costs of compliance, particularly for smaller employers,” read the letter.

Keep it simple: New laws “should aim to avoid or reduce complexity in concept and in administrative requirements. For example, SECURE 2.0 created a new threshold requiring participants earning over $145,000 to make catch-up contributions on a Roth basis only, but it didn’t take into account that plans didn’t need to track whether employees earned that amount for any other purpose.”

Plus, plan sponsors and service providers are still awaiting guidance on many important provisions of SECURE 2.0, “the most significant pension reform legislation passed in many years. This guidance is necessary for proper operation of plans, and failure to provide safe harbors and basic rules for administering the new provisions will deter new plan adoption.”

Allow collective investment trusts in 403(b)s: “We strongly support the passage of the Retirement Fairness for Charities and Educational Institutions Act of 2025 that would authorize 403(b) plans to offer CITs as plan investments,” read the letter. “CITs have long been used successfully in 401(k) plans, holding 43% of assets in large private sector 401(k) plans.”

Support lifetime income options in 401(k)s: “There is a pressing need for further action to encourage employers to include retirement investments providing lifetime income streams in their defined contribution plans. This helps to ensure that plan participants will not outlive their income,” read the letter. However, “plan sponsors remain hesitant to add stand-alone lifetime income options due to perceived fiduciary concerns,” so the Committee is urging the DOL to issue guidance on annuity features to participants.

Support pooled employer plans: “Only 40% of employees working for a small business participate in an employer-sponsored retirement plan. Only 58% of small businesses even offer access to such plans,” read the letter. “A PEP provides economies of scale that may result in lower fees and reduced administrative burden for an organization … Small employers have bargaining power comparable to that of large employers in negotiating contracts with service providers, can spread costs over more employees and employers, and will have adequate staff to implement lower-cost retirement savings plans.”

Establish a plan sponsor tax credit for employee financial education: “While some plan sponsors provide general education sessions for their employees, these programs are … insufficient for employees’ needs. More targeted financial wellness programs are needed,” said Reinstein. “Highlighting the importance of saving in a 401(k) plan will lead to better long-term retirement savings and avoid plan leakage (pre-retirement withdrawals).”