A wide range of bipartisan retirement proposals is sparking fresh conversation in Washington for 2026. Many focus on offering employers new ideas for expanding access, simplifying plans, and enhancing flexibility for today’s evolving workforce.
Retirement policy remains an active and collaborative conversation in Washington, with bills that seek to modernize the system and strengthen financial security for Americans. Current proposals focus on practical improvements such as streamlining plan administration, expanding access for younger and independent workers, and introducing greater flexibility in investment and income options. Together, these measures reflect a broader effort to adapt retirement policy to evolving workforce trends and economic realities. While election-year dynamics and budget priorities are sure to influence timing, bipartisan interest suggests meaningful progress could be possible.
To help employers navigate what might be coming, below are the retirement bills that have been introduced in this congress, including what they mean to employers and what plan design decisions may lie ahead.
What it does: Lowers the minimum participation age to 18 and removes certain audit/testing requirements for younger workers.
Why it matters to sponsors: Employees are starting to save earlier. The average age to start saving for retirement dropped from 31 in 2021 to 26.5 in 2024.
Looking ahead: Employers may want to review eligibility rules, onboarding changes to reach younger employees and conduct life-stage communications. Recent Principal® testing shows that age-targeted content can generate up to three times more engagement.
What it does: Creates a safe harbor for plans to automatically reenroll employees who previously opted out of the retirement plan. Plans using qualified automatic contribution arrangements (QACAs) and eligible automatic contribution arrangements (EACAs) would be allowed to automatically reenroll workers back into the retirement plan at least once every three years.
Why it matters to sponsors: Even though re-enrollment is allowed today, the bill would provide a clear safe harbor under law offering further confidence to adopt re-enrollment. Adding re-enrollment to the plan can be an effective way to help boost participation and improve plan health. One Principal client, a mid-sized manufacturing firm, has implemented annual re-enrollment since 2022 and has consistently maintained a participation rate above average of 96% the last three years, demonstrating the positive outcomes this approach can drive.
Looking ahead: It may be helpful for employers to coordinate with recordkeepers and payroll providers to implement annual re-enrollment windows, update participant notices, and monitor opt-out rates. Consider aligning re-enrollment with annual reviews or open enrollment to streamline communications.
What it does: Allows participants age 50 or older to initiate an in-service, penalty-free withdrawal to rollover all or some of their vested employer contributions from a defined contribution plan into an individual retirement annuity. The goal is to give pre-retirees more time and flexibility in converting portions of the retirement savings into guaranteed lifetime income.
Why it matters to sponsors: Recent Principal research shows that employers are recognizing that employees need help converting their retirement savings into an income stream.
Looking ahead: Employers should consider assessing participant education needs, and special requirements for 401(f) notices included in the bill.
What it does: Allows direct rollovers from Roth IRAs into employer-sponsored designated Roth accounts, enabling easier consolidation of Roth savings. Think of it as Roth-to-Roth consolidation.
Why it matters to sponsors: With more than 20 states launching or expanding Roth-based auto-IRA programs, more new hires will likely arrive with small Roth IRA balances. This could create fragmentation in employees’ savings and more questions about how to handle any outside Roth assets. Consolidation can help sponsors keep retirement savings centralized in the plan and in turn support fiduciary oversight and position the employer plan as the primary destination for long-term saving.
Looking ahead: Employers and recordkeepers may want to prepare operational rules for accepting Roth IRA rollovers, update plan documents, and craft participant communications on consolidation benefits and tax considerations.
What it does: Expands pooled employer plan (PEP) access for gig workers and adds flexibility for simplified employee pensions (SEPs) without affecting employment classification.
Why it matters to sponsors: Independent and contingent workers are becoming a much larger share of the labor market with the freelance population projected to surpass 90 million by 2028.
Looking ahead: Employers and platforms serving independent workers may want to explore PEP participation paths and coordinate eligibility rules.
What it does: Creates a safe harbor allowing employers to provide portable benefits to independent workers without triggering worker reclassification.
Why it matters to sponsors: As more employers use contractors to fill critical talent gaps, many want to offer benefits to help attract and retain these highly skilled independent workers. However, there’s a risk it could be interpreted as evidence of employee status and misclassification. This bill would remove that barrier by clearly stating that offering portable benefits cannot be used to argue that a contractor should be classified as an employee. That clarity could give employers a compliant pathway to offer sought-after benefits to a highly competitive contract labor market.
Looking ahead: Companies may find it beneficial to assess vendor solutions for portable benefits and document compliance safeguards.
Note: The House passed the INVEST Act on December 11, 2025, with strong bipartisan support. The Senate Banking Committee is expected to take it up sometime this year.
What it does: A bipartisan bill focused on strengthening capital formation in the U.S. by modernizing securities laws to expand access to private and public markets and facilitate greater capital flow to small businesses and underrepresented regions. Among the many bills that form the INVEST Act is the Retirement Fairness for Charities and Educational Institutions Act that would allow 403(b) plans to invest in Collective Investment Trusts (CITs) and insurance company separate accounts, bringing them closer to parity with 401(k) plans.
Why it matters to sponsors: 403(b) plans would now be able to access the same lower-cost, more flexible investments already common in 401(k) plans. Lower fees can help improve participant outcomes, strengthen the plan’s fiduciary story, and help sponsors build more diversified, institutionally priced investment lineups at scale.
Looking ahead: To prepare, tax-exempt and non-profit employers can review their investment policy statements, recordkeeper capabilities, and share-class options for CIT availability. Talk with financial professionals and retirement service providers about performing investment reviews and analysis if an expanded universe of investment options becomes available to 403(b) plans.
What it does: Allows small nonprofits, (organizations described in Internal Revenue Code (IRC) § 501(c) and exempt under § 501(a) with fewer than 100 employees), to claim startup and automatic (auto) enrollment tax credits against payroll taxes. The credit is the lesser of the standard startup credit amount (up to $5,000 annually for three years) or the nonprofit’s total payroll tax liability for that year.
Why it matters to sponsors: Many small nonprofits struggle to offer retirement plans because of budget limitations. This bill could level the playing field with for-profit small businesses and may give nonprofits a more competitive way to help attract and retain employees who typically expect access to workplace retirement benefits.
Looking ahead: Small nonprofit employers should talk to a financial professional to evaluate plan options (single employer 403(b)s, 403(b) PEPs, SIMPLE IRAs) and estimate net costs after the credits. Under current law, newly established plans must auto-enroll eligible employees at a default rate of 3% with an annual auto-increase of 1% to at least 10%, (15% max), unless exemptions apply.
What it does: Provides enhanced startup tax credits for micro-employers (10 or fewer employees) who establish defined contribution plans. Raises the startup tax credit from 50% to 100% of eligible expenses and boosts the minimum credit from $500 to $2,500 for each year of the three-year eligibility period.
Why it matters to sponsors: Nearly 40% of workers at small employers lack access to retirement benefits.
Looking ahead: Micro-employers could benefit from modeling total costs after credits and exploring low-cost plan designs (e.g., PEPs). As noted earlier, for many newly established retirement plans, auto-enrollment and auto-increase are required. Engage financial professionals to help select retirement providers with streamlined set-up and service models.
There are additional bills that would require employers to offer retirement plans and introduce federally managed plans. While these measures could expand coverage, they face steep challenges because of high implementation costs, making progress difficult.
Several bills aim to promote employee ownership through measures such as federal financing for ESOPs and cooperatives, clearer valuation standards, and new loan programs to support ownership transitions. While these proposals could help with succession planning and deepen employee engagement, they primarily apply to employers considering ESOP structures rather than broad retirement plan changes.
Retirement policy continues to be an area where bipartisan collaboration is not only possible but promising. For plan sponsors, staying informed and proactively reviewing plan design and service provider capabilities can help reduce future disruptions and strengthen competitiveness. Employers who adapt early are likely to be better positioned to respond quickly when new requirements take effect.
