The new administration has already issued multiple executive orders and other memoranda overturning existing orders and requiring new actions by agencies. These included the routine order signed by every recent president ordering agencies to withdraw any material not published by the Federal Register as of noon on Inauguration Day.

In addition, federal agencies have been ordered to take 60 days to review existing rules and determine if changes need to be made. They have also been ordered to eliminate 10 rules for each new rule they create. Moreover, a requirement that IRS rules be subject to review by the Office of Management and Budget was reinstated.

Ongoing litigation

While agency rules are frozen for now, litigation continues unabated against government rules. There are also numerous participant lawsuits; in some of these, the previous administration filed amicus curiae (friend of the court) briefs siding with the participants.

It is highly likely that the new administration will drop appeals of court rulings overturning the previous administration’s rules and will contradict that administration’s amicus positions in future cases.

Legislation

The 2019 SECURE Act (SECURE) and the SECURE 2.0 Act of 2022 (SECURE 2.0) were bipartisan, bicameral laws that included both parties’ priorities. Expectations are that there will be a SECURE 3.0 and the bipartisan, bicameral process will again apply. However, it is unlikely that SECURE 3.0 will be completed before 2026. This year will be for gathering suggestions for changes through hearings and discussion.

The focus for 2025, or at least the first part of it, is budget reconciliation. This allows a bill to get to the floor of the Senate (and pass) with a majority vote (rather than the 60 votes needed to avoid a filibuster). Budget reconciliation is restricted to tax and revenue issues. Policy changes cannot be included unless the policy issue is incidental to the primary revenue impact.

In the past, “revenue raisers” involving retirement issues have been suggested. One favorite is changing some types of elective participant contributions from pre-tax to Roth. For example, SECURE 2.0 requires all catch-up contributions to be made as Roth contributions if the employee’s wages are subject to the old age, survivors, and disability portion of the Federal Insurance Contributions Act (FICA) in the prior year from the same employer exceeded $145,000 (indexed). “Rothification” as a revenue raiser is always possible in budget reconciliation, but the House and Senate tax and labor committees that have responsibility for pensions may prefer to wait and save any revenue raised by such changes to pay for SECURE 3.0. Other prior suggestions have been to tax or otherwise restrict large individual retirement accounts (IRAs); accelerate distributions from accounts of individuals who have large amounts in IRAs and DC plans; and limit deferred compensation.

Department of Labor (DOL)

The biggest changes will be at the DOL, as was the case in 2017 and 2021. The same issues that were the focus of disagreement and litigation in 2017 and 2021 remain the focus today: the fiduciary rule and environmental, social, and governance (ESG) investing and proxy voting.

The fiduciary rule

The DOL’s fiduciary rule has a long history. Changes to the original rule were first promulgated during 2016. In 2018, the U.S. Court of Appeals for the Fifth Circuit held those changes invalid and prevented them from being implemented nationally.

In 2024, the DOL adopted a new fiduciary rule. However, the Fifth Circuit again stopped the rule from going into effect. It appears very unlikely that the DOL under the new administration will further challenge the Fifth Circuit’s decision.

ESG guidance

The DOL’s ESG guidance also has a long history. The back and forth between Democratic and Republican administrations began in the early 1980s when the DOL issued advisory opinions on “social investment.” In 2020, DOL issued a rule stating that “all other things being equal” — the standard for considering non-pecuniary issues, such as ESG, is extremely rare and any plan relying on “other things being equal” must document the analysis. In 2022, the DOL withdrew the prior rule and issued a new rule more favorable to ESG investment and proxy voting.

The impact of ESG comes up in proxy voting as well as in selecting investments, and it is in the proxy arena that a district court in the Fifth Circuit recently took a strong position against considering ESG (see the recent decision in Spence vs. American Airlines 2024 WL 733640 (N.D. Tex. 2024). It appears likely that the DOL under the new administration will agree with the Fifth Circuit position.

Pension Benefit Guaranty Corporation (PBGC)

Two issues have dominated discussion of the PBGC in the last few years.

The first issue would need to be addressed by legislation. Employers sponsoring single-employer DB plans have argued for years that premiums are too high and that the high premiums discourage establishing and maintaining DB plans. While this is somewhat of a bipartisan criticism, lowering PBGC premiums requires legislation. PBGC premiums, although they can only be used by the PBGC, are “on budget.” Thus, any legislation to take them “off budget” or to lower them would appear to lower budget revenue. This could be done in a reconciliation bill, but Congress is always looking for revenue; this makes revenue losers hard to get enacted.

The second issue that has been a major focus is multiemployer plans. Democrats in Congress managed to get special financial assistance (SFA) passed without changes in the multiemployer funding rules desired by Republicans. According to the Heritage Foundation’s Project 2025, tightening the multiemployer funding rules remains an objective.

On the regulatory side, the PBGC proposed a rule governing the interest rate that multiemployer plans may use to determine withdrawal liability. The higher the interest rate used, the lower a withdrawing employer’s liability is to the plan. The PBGC has had regulatory authority since 1980 but had not published any regulations. In 2022, the PBGC published a proposed rule that allowed the actuary to choose, in the actuary’s best judgment, an interest rate from a range of rates between the PBGC rate and the rate used in the plan’s funding assumption. While there was support from many multiemployer plan sponsors for the proposed PBGC approach, many contributing employers’ groups did not support allowing the decision to remain within the actuary’s best judgment. It is unclear how the issue will fare under the new administration’s PBGC.

The Treasury Department

The Treasury Department has published much of the guidance needed for implementation of SECURE and SECURE 2.0 (at least in preliminary form if not as a final rule). There is unlikely to be much more, if any, guidance in the next several months.

Treasury leadership is not in place and the clearance process will be frozen until they are. Also, Treasury staff and leadership will be focused on working with Congress on reconciliation. Guidance will take a backseat unless new appointees feel that there are issues in current guidance that that are urgent to change.

Implications for plan sponsors

Plan sponsors will need to monitor litigation and congressional activity, as well as executive orders and directives.

New administrations come in with their own agendas based on issues that have been discussed for years. Sometimes implementing the change in view takes a little time because of the need to follow the Administrative Procedures Act when withdrawing or amending a rule. In pending litigation, it is easier for an administrative position to be changed or a case not to be pursued.