Plan Sponsors Urged to Prepare for Regulatory Guidance, Uncertainty

Plan sponsors should not wait for federal policymakers to finish writing the rules before preparing for a wave of retirement plan changes, panelists warned at the 2026 PLANSPONSOR National Conference, held this week in Nashville, Tennessee.

During a session on implementation of recent retirement-related laws, speakers said the Departments of Labor and the Treasury and the IRS are expected to prioritize guidance on: alternative investments; soon-to-launch Trump Accounts; health plan transparency; and parts of the SECURE 2.0 Act of 2022. But the panelists also cautioned that staffing shortages at the DOL, political priorities and unfinished regulatory work could slow the arrival of the practical guidance many employers need.

The panel discussion focused on what plan sponsors must do while awaiting final rules. Panelists suggested that sponsors keep the optional provisions from SECURE 2.0 on their committee agendas, revisit their investment policy statements, and prepare for shifting fiduciary expectations as a result of pending rules such as the DOL’s proposed rule on prudence in investment selection.

That rule, “Fiduciary Duties in Selecting Designated Investment Alternatives,” should garner plan sponsors’ attention regardless of future legal challenges, even though it is not yet finalized, according to the panelists. That is because the proposal would apply a fiduciary standard to the selection of any and all plan investments. To prepare for that rule being finalized, possibly this year, panelists said it behooves plan sponsors to review their investment lineups to ensure their plans are appropriately monitoring and benchmarking their offerings and that plan fiduciaries and their advisers understand any potentially complex offerings.

That said, panelists also warned plan sponsors of the constant political shift in Washington and how that dynamic continues to affect rulemaking.

Political Shifts

Lisa Gomez, the former head of the Department of Labor’s Employee Benefits Security Administration who now runs LMG Collaborative Consulting Solutions, said agency priorities are often shaped by politics and stakeholder pressure, rather than by the practical needs of plan sponsors.

“There’s work that just needs to be done that will be helpful on a practical level to people who are actually doing the work,” Gomez said. “That’s not always where” the department’s efforts focus.

Kendra Isaacson, a principal at Mindset, said the immediate focus in Washington is likely to include mandatory SECURE 2.0 guidance, Trump Accounts created under the One Big Beautiful Bill Act, and a new federal effort to expand IRA access for workers without access to workplace retirement plans.

“There’s a lot,” Isaacson said, noting that plan sponsors are still waiting on guidance for optional SECURE 2.0 provisions, including those regarding certain kinds of plan distributions and student loan matches. “I hate to convey bad news, but you’re not likely to see a lot of this in the immediate future.”

Priorities 

For EBSA’s part, its head, Assistant Secretary of Labor Daniel Aronowitz, laid out the agency’s enforcement agenda quite clearly during a speech at the conference on June 1. Aronowitz claimed the agency will move swiftly to finalize its investment selection rule and continue toward its goal of reducing what he believes is an unhealthy litigation environment.

Trump Accounts, meanwhile, have also received more focus from Washington, since the expected rollout is only one month away and several questions remain about how the accounts will work. Secretary of the Treasury Scott Bessent, who spent much of this week testifying before Congress, stated that the accounts are a major priority. 

Focus on SECURE 2.0, Changes on ESG Investing

Robert R. Gower, a director at employee benefits law firm Trucker Huss, said plan committees should not allow delayed guidance to push optional features of SECURE 2.0—a follow-up to the Setting Every Community Up for Retirement Enhancement Act of 2019—off their agendas. He also urged sponsors to begin discussing whether alternative investments could be appropriate for their plans, particularly as the DOL moves toward finalizing investment selection rules.

“Making sure that you don’t let those things drop off in your committee agendas” is critical, Gower said, because delays in guidance can cause sponsors to “put things to the side.”

Panelists said the proposed rule on investment selection may have broader consequences than some plan sponsors expect. Gomez said employers that have no intention of adding private equity, cryptocurrency or other alternative asset classes to their plan’s investment menu should still pay attention because the rule could shape how fiduciaries evaluate all plan investments.

“Every investment should be looked at with the same lens of a prudent fiduciary,” Gomez said.

The speakers also pointed to the role of environmental, social and governance factors in investment selection as an area in which another regulatory swing may be coming. Isaacson said that while the current investment selection proposal focuses on the duty of prudence that plan fiduciaries have to participants, the administration is expected to focus soon on the second part of fiduciary duty—loyalty, defined as placing the interests of the company and shareholders ahead of personal interests—potentially making ESG factors harder to justify in retirement plans.

Gower said the constant back-and-forth has already discouraged some committees from acting.

“They’re shy of it now,” he said of sponsors once interested in ESG options, “and they’re not shy of it because of a change in regulations. They’re shy of it because the rules keep changing on them.”

Challenges to Updating Regulations

Another major concern, Gomez said, is whether EBSA has enough staff and institutional knowledge to produce timely, useful guidance. She said the agency was already stretched during her tenure and now faces additional challenges after departures of experienced staff members.

Under the DOL’s budget request for fiscal year 2027, EBSA’s funding would be cut by $10 million to a total of a $181 million. According to Gomez, EBSA is also working with about 500 to 600 full-time staff members, down from the nearly 900 she had during her tenure.

“There’s just not enough people to write these things,” Gomez said.

Health-plan regulation is also competing for attention, panelists said, especially on the topics of mental health parity, pharmacy benefit managers, fertility benefits and transparency rules. Isaacson said those efforts fit into a broader affordability message ahead of the midterm elections.

The DOL and Congress recently passed rules and laws meant to make PBM pricing more transparent. The approaches in both are similar and would force pharmacy benefit service providers to disclose a wide range of compensation and pricing practices directly to plan fiduciaries, which could further alter federal oversight.

“There’s a theory that transparency drives affordability,” Issacson said. “[Does] it? I don’t know. But we’re going to hear it, and we’re going to see it.”

Looking ahead, Isaacson said a broader SECURE 3.0 package is being discussed in Washington, but major retirement legislation is unlikely before year-end.

“Just worry about SECURE 1, 2 and [the One Big Beautiful Bill Act] for the time being,” Isaacson said. “But don’t worry, more retirement [legislation] is happening.”