Bipartisan Efforts to Enhance 401(k) Annuity Access

The Retirement Simplification and Clarity Act, also known as H.R. 6324, is a bipartisan bill introduced in November 2025 aimed at providing 401(k) investors with greater access to guaranteed income through annuities. The legislation proposes allowing employees aged 50 and older to roll over part or all of their 401(k) assets into a qualified annuity while still employed. Currently, this option is generally unavailable to younger employees, although some plans permit such moves once individuals reach age 59½, when they are no longer subject to a 10% early withdrawal penalty. David Chavern, president and CEO of the American Council of Life Insurers, emphasized the limitations faced by workers, stating, "Right now, most people can't move money [from their 401(k)] into an annuity while they are still enrolled."

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The increasing prevalence of 401(k) plans has shifted the retirement landscape, moving away from traditional pensions that provided steady income. According to BlackRock's 2025 Read on Retirement survey, 66% of savers express concern about running out of money in retirement, and 93% desire guaranteed income during their retirement years. This shift has led to a growing interest in annuities, which offer a contract where individuals exchange a lump sum for regular payments over time. Some 401(k) plans are beginning to incorporate annuities into their offerings, with the Secure Act of 2019 facilitating this trend by reducing employers' legal liability regarding annuity providers.

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While the proposed bill aims to enhance retirement security, financial advisors caution that rolling over 401(k) funds into annuities may not always be the best option for consumers. Keeping funds within a 401(k) allows for continued growth, which could be more beneficial in the long run. The bill also mandates the IRS to update the 402(f) notice, which informs individuals about their distribution options and tax implications when leaving an employer, ensuring clearer communication.

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Despite the potential benefits, there are concerns regarding the implications of the bill. Critics argue that annuities can be complex financial products with varying fees and terms that may not suit all investors. Additionally, there is skepticism about whether the bill will advance through the legislative process, as it currently remains in the House Committee on Ways and Means with limited cosponsors.

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Rep. Jimmy Panetta, D-Calif., who co-sponsored the bill with Rep. Darin LaHood, R-Ill., stated that the legislation aims to provide workers with more options for securing their retirement income. However, the uncertainty surrounding the bill's progression raises questions about its future impact on retirement planning.

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As the Retirement Simplification and Clarity Act awaits further consideration in Congress, stakeholders in the retirement planning sector will be closely monitoring its developments. The outcome of this legislation could significantly influence how workers manage their retirement savings and access guaranteed income through annuities.

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