Plan for Major 401(k) Changes Gets Boost by Lawmakers

Representative Jimmy Panetta of California introduced a bill in November 2025 that, if passed, will change several key components of 401(k) retirement plans. It's called the Retirement Simplification and Clarity Act.

This bill has several cosponsors, both Democrats and Republicans, and it just added another cosponsor in 2026. The number of cosponsors on this bill shows growing support for it in Washington, though it still has a long way to go before potentially becoming a law.

What is the Retirement Simplification and Clarity Act?

The Retirement Simplification and Clarity Act is a bipartisan bill drafted by both Democrats and Republicans that has a few important features. First, it would make the 402(f) notice that every employee receives after leaving a job much easier to understand. Right now, the notice explains what 401(k) options employees have, but many say it's confusing.

Secondly, this bill would expand retirement options by allowing workers to put part of their 401(k) investments into an annuity while they're still working.

Which American representatives are sponsoring the Retirement Simplification and Clarity Act?

As mentioned, this bill is bipartisan. Democratic Representative Jimmy Panetta of California introduced the bill on November 28, 2025. It was cosponsored by Republican Representative Darin LaHood of Illinois, Republican Representative Max Miller of Ohio, Republican Representative Brian Fitzpatrick of Pennsylvania, Democratic Representative Danny Davis of Illinois, Republican Representative Nathaniel Moran of Texas, Democratic Representative Suzan DelBene of Washington, and Democratic Representative Bradley Scott Schneider of Illinois.

Two cosponsors joined after the bill was introduced, which is a good boost for this bill and shows a growing level of support. They are Republican Representative Robert Bresnahan of Pennsylvania, and most recently, Democratic Representative James Walkinshaw of Virginia, who joined in April.

Why the 402(f) notice needs significant updating

When the Secure 2.0 Act passed in 2022, it requested that the Government Accountability Office review 402(f) notices. The goal was to find out whether or not the 402(f) notices were adequate in helping American workers understand their 401(k) options after leaving a job. What they found was that 82% of workers did not know their distribution options, and 38% didn't know the tax consequences of an early 401(k) withdrawal.

How this new bill would change the 402(f) notice

Part of the language of the bill specifically asks the IRS to rewrite the 402(f) notice to be clear and straightforward, using language that American workers can easily understand.

As part of the revision process, the 402(f) notice should include information about 401(k) rollover options and penalties for those who decide to cash out.

The other important change: adding annuities to 401(k) plans

If passed, another big change that would come with this bill is the option for employees to have annuities in their 401(k)s. This is especially appealing to those nearing retirement because annuities provide guaranteed income during retirement. This bill would give employees over age 50 the ability to convert a portion of their 401(k) investments into an annuity.

The pros and cons of annuities in 401(k)s

There are benefits and drawbacks for workers to consider before getting an annuity. The biggest benefit is that an annuity provides guaranteed lifetime income. This brings a sense of security to those who worry about dwindling retirement accounts and stock market swings.

However, the biggest drawbacks are that many annuities have higher fees and expenses than other types of investment products, which is important to consider if you're trying to preserve your retirement funds as long as possible.

How to stay informed on the progress of this nonpartisan bill

This bill is currently in the House Ways and Means Committe who can decide whether or not to move the bill to a vote. If it passes, it will go to the House of Representatives and then the Senate. You can set up alerts to track the bill's changes.

If the bill passes, you can ask your employer whether or not they will add annuities to their 401(k) plan, keeping in mind that 401(k) changes take time to fully roll out. If you have any questions about annuities, your 401(k) rollover options if you leave a job, or whether or not you're on track for retirement, consult a financial advisor.

Bottom line

If this bill passes, it would make 401(k) disclosures much clearer and give older workers the opportunity to diversify their 401(k) investments more. After all, most employees working now have the goal of enjoying a stress-free retirement one day. Having the option to secure a portion of retirement income in an annuity would offer peace of mind to many workers, though there are still drawbacks to consider, too.

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