A bipartisan bill is gaining momentum in Congress that seeks to offer greater flexibility to workers aged 50 and older regarding their retirement savings. The legislation focuses on simplifying retirement planning by allowing individuals to convert a portion of their 401(k) funds into guaranteed income through annuities while still employed.

Easing Restrictions on Annuity Conversion

Currently, most individuals must leave their job or reach traditional retirement age before rolling over 401(k) funds into an annuity. This bill proposes an exception for those 50 and older, permitting them to transfer a portion of employer-contributed savings into an individual retirement annuity earlier, if their plan allows.

Benefits of Guaranteed Income

Proponents argue this change could help individuals secure predictable income as they approach retirement, reducing the risks associated with market volatility. Annuities provide regular payments over an extended period, often for life, potentially preventing retirees from outliving their savings.

Enhanced Transparency and Clarity

The bill also addresses the complexity of retirement plan withdrawals. It mandates clear and concise explanations of available options, decision timelines, and any applicable taxes or penalties when individuals consider rolling over or withdrawing funds.

Building on Existing Legislation

This legislation builds upon previous efforts like the SECURE 2.0 Act, which expanded retirement savings options and adjusted the age for required minimum distributions. Congressional records show increasing support for the bill since its introduction in late November 2025.

Bipartisan Support

The original bill was cosponsored by both Republican and Democratic representatives, and additional cosponsors from various states have joined the initiative in the following months, demonstrating broad bipartisan backing.

Focus on Financial Empowerment

The bill’s sponsors emphasize the need to simplify retirement planning and empower individuals to make informed decisions about their savings. They believe hardworking Americans shouldn’t face unnecessary complexities that create uncertainty about their financial future.

Industry Perspectives

Edward Gottfried of Betterment at Work highlighted the challenges employers face in getting employees to enroll in retirement plans. He noted that auto-enrollment and auto-escalation strategies can significantly boost savings and improve financial outcomes.

Legislative Process

The bill has been introduced in the House of Representatives and referred to the House Ways and Means Committee for review. If approved by the committee, it will proceed to a full House vote before being sent to the Senate. Passage in both chambers, in identical form, is required before it can be sent to the President for approval.