The past year ushered in significant changes for employers and plan sponsors. This includes the passage of the DOL’s finalized fiduciary rule and a surge of ERISA-related lawsuits. The lawsuits involved excessive fees and misuse of forfeited funds.
There was also the transition to a new presidential administration. Now that 2025 is firmly underway, plan sponsors need to plan and prepare for the year ahead. There are crucial considerations that should be at the forefront of their agenda.
One key area to watch is tax policy. President Trump has been a strong supporter of extending and even making permanent tax cuts. This could potentially affect overall 401(k) growth, according to Richard Clarke.
Clarke is the Chief Insurance Officer at a leading direct and digital insurer. “The new administration’s tax policy changes could significantly influence 401(k) growth,” Clarke noted. “The potential for permanent tax cuts may encourage more participation and higher contribution rates.
Plan sponsors prepare for 2025 changes
Plan sponsors should stay informed about legislative updates and adjust their strategies accordingly.”
Plan sponsors must also be vigilant regarding new legal precedents. For instance, a federal judge ruled that American Airlines violated its ERISA duties.
The airline focused on ESG factors in choosing investments. There has since been a call from city and state officials for the SEC and DOL to protect ESG investing. More than 600,000 American companies could face fines, legal penalties, and fiduciary failures.
This is for not auto-enrolling employees, offering qualified investments, or transmitting payments on time. The increasing litigation underscores the need for meticulous plan management. With healthcare costs rising, many self-funded employers are looking for smarter approaches.
Effective medical management can enhance cost efficiency and care quality. This is essential in today’s economic climate. As we move through 2025, plan sponsors should prioritize staying abreast of tax policies and legal changes.
These changes might affect their responsibilities and the growth of their plans. Being proactive and responsive to these changes will ensure compliance and optimize plan performance.
Photo by; Kelly Sikkema on Unsplash