Retirement prospects for 2025 include tax changes, cryptocurrency, and legal reform

As a new administration transitions into power this week, experts predict changes in retirement policies and reforms that might occur in 2025. During a recent webinar organized by T. Rowe Price, several speakers discussed potential legislation and policy alterations that retirement plan sponsors should expect in the upcoming year.

Aliya Robinson, the managing legal counsel for legislative and regulatory affairs at T. Rowe Price, suggested that despite the new administration, there may be a relative continuity in policies. The speaker emphasized the need for bipartisan collaboration, especially given the slim majorities in Congress and the previous experience of President Joe Biden. Robinson pointed out that many key legislative leaders related to retirement policies would remain in their positions, facilitating a smoother transition.

With tax reform being a cornerstone of President-elect Donald Trump’s campaign promises, it is expected that tax cuts will continue and possibly be extended. Robinson highlighted the potential impact of these cuts on retirement plans, indicating that government revenue losses might prompt discussions about revenue-raising measures. Among the proposals under consideration are the expansion of Roth (after-tax) retirement assets and the elimination of nonqualified deferred compensation arrangements to address revenue shortfalls.

While the SECURE 2.0 Act of 2022 was a bipartisan endeavor, certain provisions, like the Saver’s Credit, may not be as high on the administration’s agenda. Robinson noted that the current administration might not prioritize this provision as much as the previous one but stressed that the overall bill is unlikely to face significant disruptions.

Regarding Department of Labor regulations, such as the fiduciary rule and the consideration of ESG factors in retirement investments, it is anticipated that these rules might revert to pre-Biden versions under the new administration. Litigation challenges in 2024 stalled the implementation of the fiduciary rule, and the fate of the ESG rule remains uncertain as well. With a change in leadership, the DOL may not actively defend these rules, signaling a shift in regulatory approaches.

Looking ahead, Robinson mentioned the growing interest in private investments and cryptocurrency within retirement plans. As both the government and the Republican Party explore innovative solutions for retirement savings, the use of alternative assets like cryptocurrency could become more mainstream in retirement planning strategies.

In summary, the 2025 retirement outlook includes potential tax reforms, changes in retirement policy, and the possibility of litigation reforms. As the new administration navigates these challenges, collaboration between political parties and industry stakeholders will be crucial in shaping the future landscape of retirement planning in the United States.