After 4 Weeks, How the Government Shutdown Is Affecting Retirement Plans

On Tuesday, Day 28 of the government shutdown, federal agencies and departments were unable to make important updates that, if delayed much longer, could affect retirement plans and their participants.

The Internal Revenue Service, for example, operated as normal in the early days of the shutdown, but eventually needed to furlough employees and to further reduce operations as the government closure dragged on.

As it stands now, the agency is unable to publish critical information that normally would be released in fall. For example, each fall, the IRS publishes updates to various limits in defined contribution plans, such as the maximum amount individual participants can contribute to their plan. Last year, that guidance was released in early November.

Regardless of when the IRS releases the updates, retirement plan deadlines do not change because of the shutdown. Therefore, however much the limits increase, plans will need to be ready to operate by January 1, 2026.

Additionally, each month, the IRS releases key interest rates that are essential, both for calculating lump sums owed by defined benefit plans and for determining the funding responsibilities of these plans. These lump sum interest rates are particularly significant for employees contemplating the timing of their retirement, whether this year or the next.

Employees who have already made the decision to retire also need guidance on the benefits they will receive in 2026.

Many plans that operate on a calendar year basis refer to the interest rates from August to calculate lump sums for the upcoming year, and these rates were already made available in September. However, the numerous plans that rely on September interest rates for the following year have not received this information due to the shutdown. As a result, these plans are unable to compare the lump sums for 2025 and 2026.

The American Benefits Council has been communicating with the IRS and the U.S. Department of the Treasury to ensure the agencies are aware of the necessary updates and can swiftly act on them.

“There are many pressures on the government during the shutdown,” the American Benefits Council wrote in an October 27 letter to the Treasury, “We fully recognize that. Our purpose in writing is to highlight a need that should be highlighted for our older Americans who deserve the best information so that they can retire with the security they have earned.”

Meanwhile, the shutdown has also continued to affect the Department of Labor. In an October 22 filing, the DOL asked for another delay in the protracted legal challenge to the retirement security rule—often referred to as the fiduciary rule—from the previous administration. Though the DOL’s recent regulatory agenda published its intent to issue a new final rule, the lack of government funding has prohibited Department of Justice attorneys and employees from working, prompting the department to seek a 30-day extension in a filing to the U.S. 5th Circuit Court of Appeals.

The ongoing shutdown is nearing the record for the longest government closure in U.S. history, which lasted 34 days in 2018 and 2019 during Trump’s first term.