Retirement Retirement Planning

This Proposed Retirement Bill Could Change How You Use Your 401(k)

It would make your paperwork less confusing.

By Catherine Collins

Edited by Kristy DeSmit

Updated March 18, 2026

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Changes to your 401(k) retirement plan might not always make headlines, but there's a newly proposed bill all workers, especially those over 50, should know about. It's called the Retirement Simplification and Clarity Act.

This is a bipartisan bill by Representatives Jimmy Panetta (D-CA) and Darin LaHood (R-IL). They reintroduced it in November 2025, and it's currently in the House Ways and Means Committee. If the committee approves of the bill, it will go to the House for a vote. Here's what will change if it's passed.

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What will the Retirement Simplification and Clarity Act change?

The goal of the Retirement Simplification and Clarity Act is to expand retirement options for employees and make the 402(f) notice easier to understand. The 402(f) notice is a huge document employees get when they leave a job that explains what their rollover options are and the tax implications of each choice.

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Why the GAO says the 402(f) notice needs updating

The Government Accountability Office (GAO) is an independent agency that's often referred to as a "congressional watchdog." The GAO's job is to conduct research and give Congress and other agencies the results to improve aspects of the government.

The Secure 2.0 Act, which was passed in 2022, specifically asked the GAO to analyze 402(f) notices, specifically the effectiveness of them. What the GAO found is that 82% of workers weren't aware of their distribution options, and only 38% understood the tax consequences of them. Ultimately, the GAO found that the 402(f) notice was too complex and made it hard for employees to understand their options.

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

According to Representatives Panetta and LaHood, the Retirement Simplification and Clarity Act would request the IRS to redesign the 402(f) notice.

The goal is to rewrite the notice in plain language so that anyone who leaves their job fully understands all of their options for their 401(k)s, including rollover options and tax implications of each. This is a vital step for consumers who can be easily overwhelmed by financial jargon, especially when in the middle of a life change, such as switching jobs or retiring.

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The Act also aims to expand rollover options to annuities

In addition to making the 402(f) notice easier to understand, this bill also proposes making annuities available to employees over age 50. The goal of offering annuities is to give older workers more rollover options while they're still working.

Currently, most employers do not offer annuity options, so this bill would make it possible for eligible employees to turn their 401(k)s into guaranteed income.

The benefits of giving employees qualified annuities

An annuity is a financial product that converts a lump sum of money into a guaranteed lifetime income. There are several different types of annuities, such as variable annuities and single life annuities. The type that this bill proposes is a qualified annuity, which is a specific annuity that employers purchase for an employee who has to meet IRS requirements.

Many employees like the idea of an annuity because it provides a guaranteed lifetime income. They don't have to worry about running out of retirement money or stock market fluctuations negatively impacting their earnings. However, there are some drawbacks.

The drawbacks of rolling a 401(k) into a qualified annuity

Although annuities offer guaranteed income for life, there are some downsides for consumers to consider.

Some financial advisors say that employees will have better returns by leaving money in a 401(k) to allow for more growth. Additionally, annuities typically come with additional fees and expenses, which may make them more costly.

Ultimately, whether or not to roll a part or all of your 401(k) into an annuity depends on your risk tolerance, age at retirement, and your retirement lifestyle goals.

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How to stay informed on the progress of this bill

If you're interested in this Retirement Simplification and Clarity Act's progress, you can track it online. Some websites even allow you to track the bill's activities and set up alerts to be notified of any changes.

Currently, the bill is in the House Ways and Means Committee. If the committee decides to move the bill to a vote, it will go to the House of Representatives first before going to the Senate.

Bottom line

The Retirement Simplification and Clarity Act aims to help Americans have a more stress-free retirement by making 401(k) withdrawal disclosures clearer and easier to understand. It also adds another 401(k) rollover option to plans: annuities. These can provide workers with a guaranteed income in retirement, though they can also come with drawbacks, such as high fees.

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