Skip to main content
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
  • Store
  • Sign In
  • Account
    • My Account
    • Logout
    • Global
    • India
    • MENA
SHRM
About
Book a Speaker
Join Today
Renew
Rejoin Now
Renew
  • Membership
  • Certification
    Certification

    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    Events & Education

    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    Community

    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Close
  • Membership
  • Certification
    back
    Certification
    Smiling asian student studying in library with laptop books doing online research for coursework, making notes for essay homework assignment, online education e-learning concept
    Get Certified!

    Be recognized as an HR leader with your SHRM-CP or SHRM-SCP credential.

    • How to Get Certified

      Demonstrate your ability to apply HR principles to real-life situations. No other HR certification compares.

      • How to Get Certified
      • Eligibility Criteria
      • Exam Details and Fees
      • SHRM-CP
      • SHRM-SCP
      • Which Certification is Best for Me
      • Certification FAQs
    • Prepare for the Exam

      Give yourself the best chance to pass your SHRM certification exam.

      • Exam Preparation
      • SHRM BASK
      • SHRM Learning System
      • Instructor-Led Learning
      • Self-Study
      • Study Aids & Add-ons
    • Recertification

      Recertify your SHRM Credentials before your end date!

      • Specialty Credentials
      • Qualifications
  • Topics & Tools
    back
    Topics & Tools

    Stay up to date with workplace news and leverage our vast library of resources to streamline day-to-day HR tasks.

    The white house in washington, dc.
    Executive Order Impact Zone

    Do not abandon, but evaluate and evolve. It is about legal, equal opportunity for all.

    • News & Trends

      Follow breaking news and emerging workplace trends.

      Legal & Compliance

      Stay informed on workplace legal updates and their impacts.

      From the Workplace

      Explore diverse perspectives from your peers on today's workplaces.

      Flagships

      Get curated collections of podcasts, videos, articles, and more produced by SHRM.

    • HR Topics
      • AI in the Workplace
      • Civility at Work
      • Compensation & Benefits
      • Inclusion & Diversity
      • Talent Acquisition
      • Workplace Technology
      • Workplace Violence Prevention
      SEE ALL
      SHRM Research
    • Tools & Samples

      Access member resources and tools to streamline HR tasks.

      • Forms & Checklists
      • How-To Guides
      • Interactive Tools
      • Job Descriptions
      • Policies
      • Toolkits
      SEE ALL
      Ask an Advisor
  • Events & Education
    back
    Events & Education
    SHRM25 in San Diego, June 29 - July 2, 2025
    Join us for SHRM25 in San Diego

    Register for the World’s Largest HR Conference being held on June 29 - July 2, 2025

    • Events
      • SHRM25
      • The AI+HI Project 2025
      • INCLUSION 2025
      • Talent 2026
      • Linkage Institute 2025
      SEE ALL
      Webinars
    • Educational Programs

      Designed and delivered by HR experts to empower you with the knowledge and tools you need to drive lasting change in the workplace.

      Specialty Credentials

      Demonstrate targeted competence and enhance credibility among peers and employers.

      Qualifications

      Gain a deeper understanding and develop critical skills.

    • Team Training & Development

      Customized training programs unique to your organization’s needs.

  • Business Solutions
  • Advocacy
    back
    Advocacy

    Make your voice heard on public policy issues impacting the workplace.

    Advocacy
    SHRM's President & CEO testifies to Congress on "The State of American Education"
    • Policy Areas
      • Workforce Development
      • Workplace Inclusion
      • Workplace Flexibility & Leave
      • Workplace Governance
      • Workplace Health Care
      • Workplace Immigration
      State Affairs

      SHRM advances policy solutions in state legislatures nationwide.

      Global Policy

      SHRM is the go-to for global HR leaders and businesses on workplace matters.

    • Advocacy Team (A-Team)

      SHRM’s A-Team is a key member benefit, giving you the tools, insights, and opportunities to shape workplace policy and drive real impact.

      Take Action

      Urge lawmakers to support policies that create lasting, positive change.

      Advocacy & Legislative Resources

      Access SHRM’s curated policy materials and content.

    • SHRM-Led Coalitions
      • Generation Cares
      • The Section 127 Coalition
      • Learn More & Partner with SHRM Government Affairs
  • Community
    back
    Community
    Woman raising hand in group
    Find a SHRM Chapter

    Easily find a local professional or student chapter in your area.

    • Chapters

      Find local connections from over 607 chapters and state councils and create your personalized HR network.

      SHRM Connect

      Post polls, get crowdsourced answers to your questions and network with other HR professionals online.

      SHRM Northern California

      Join SHRM members in the greater San Francisco Bay area for local events and networking.

    • Membership Councils

      Learn about SHRM's five regional councils and the Membership Advisory Council (MAC).

      • Membership Advisory Council
      • Regional Councils
    • Volunteers

      Learn about volunteer opportunities with SHRM.

      • Volunteer Leader Resource Center
Join Today
Renew
Rejoin Now
Renew
  • Store
    • Global
    • India
    • MENA
  • About
  • Book a Speaker
  • Foundation
  • Executive network
  • CEO Circle
  • Enterprise Solutions
  • Linkage Logo
SHRM
Sign In
  • Account
    • My Account
    • Logout
Close

  1. Topics & Tools
  2. Workplace News & Trends
  3. Compensation & Benefits
  4. Biden Proposals Could Alter Retirement Plan Landscape
Share
  • Linked In
  • Facebook
  • Twitter
  • Email

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.


Error message details.

Copy button
Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.


Learn More
News

Biden Proposals Could Alter Retirement Plan Landscape

Campaign called for an overhaul of 401(k) tax breaks

November 16, 2020 | Stephen Miller, CEBS

An older couple looking at documents on a laptop in their living room.

An incoming administration headed by President-elect Joe Biden is expected to differ from President Donald Trump's approach to regulating employer-sponsored retirement plans.

Under the Trump administration, "we saw a walk back of a lot of the Obama-era government regulations," said Sam Henson, senior vice president of legislative and regulatory affairs for Lockton Retirement Services, an employee benefits advisory and brokerage firm. "A Biden administration will look significantly different," with a heavier regulatory hand. 

Serena Simons, senior vice president in HR consultancy Segal's Washington, D.C., office, said "the Democratic platform for retirement focuses on improving and increasing savings opportunities, particularly for low-income workers." She added that "there will be a lot of activity in that area, including the possibility of a mandated savings vehicle that employers would have to adopt so that every employee has some opportunity for tax-favored savings."

The Society for Human Resource Management (SHRM) stands "ready to work with the new administration, the new Congress and other key stakeholders on policies and programs that promote better workplaces and employment opportunities for all," said Johnny C. Taylor, Jr., SHRM-SCP, SHRM president and chief executive officer.

"SHRM believes that every American worker should be afforded the opportunity to save for his or her own retirement," said Chatrane Birbal, vice president of public policy at SHRM. "Retirement reform proposals should facilitate and encourage voluntary employer-sponsored plans, as well as individual savings, through consistent tax incentives and simplified regulations."

Equalizing 401(k) Tax Benefits

Biden supports ending upfront tax breaks for contributing to traditional 401(k) plans and replacing them with flat-tax credits.

Current tax benefits for retirement savings provide "upper-income families with a much stronger tax break for saving and a limited benefit for middle-class and other workers with lower earnings," according to Biden's campaign website. "The Biden plan will equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement."

Roll Call reported that Biden's plan would "equalize" the incentive system by replacing tax-deductible contributions with flat-tax credits for each dollar saved. "The campaign hasn't said what that percentage would be, but the Urban-Brookings Tax Policy Center has estimated a 26 percent credit would be roughly revenue-neutral over the first 20 years and beyond, which the Biden campaign is aiming for," Roll Call reported. "Under this plan, someone earning $600,000 would get the same tax break as someone making $60,000—an identical $260 tax credit for their $1,000 retirement contribution."

The credit would also be refundable, so employees earning too little for the credit to offset their income tax liability would still receive the full value.

"By and large, it would help lower- and middle-income people save more," said Eric Toder, co-director of the liberal Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, Forbes reported.

However, Katharine Finley, senior compliance counsel at Hall Benefits Law in Atlanta, and Anne Tyler Hall, principal at the firm, wrote that "The promise of a credit at the end of a taxable year may not be enough to incentivize lower income-tax bracket individuals to contribute." They added, "At the same time, higher income-tax bracket individuals may change the way they contribute by moving to Roth accounts instead of making pretax contributions."

"Traditional 401(k) plans will become less valuable for high earners and more valuable for low earners," said John Lowell, an Atlanta-based partner and actuary with October Three Consulting, a retirement plan advisory firm. "Higher earners will seek other means of retirement saving including, for example, Roth plans and other non-401(k) plans."

Brian Graff, CEO of the American Retirement Association, which represents plan services providers, wondered "how reduced tax incentives for small-business owners would impact their willingness to make matching and other contributions or, even more worrisome, to have a plan in the first place."

Other Positions

Biden's campaign website also addressed the following retirement plan issues:

Automatic enrollment 401(k)s

According to the Biden campaign website, "Under Biden's plan, almost all workers without a pension or 401(k)-type plan will have access to an 'automatic 401(k),' which provides the opportunity to easily save for retirement at work." Although details aren't provided, this could involve a mandate for employers to provide auto-enrollment plans with subsidies for small businesses to set them up, or possibly a government-provided defined contribution plan option, building on state-run auto-enrollment savings programs.

"Under Biden's plan, almost all workers without a pension or 401(k)-type plan will have access to an 'automatic 401(k),' which "provides the opportunity to easily save for retirement at work," Lowell commented.

"Retirement plans represent an important aspect of the total compensation package used by employers to recruit and retain employees," Birbal said. "As a result, many employers are already proactively enrolling employees into employer-sponsored retirement plans."

Multiemployer pension plan relief

Forthcoming Biden proposals, according to his website, will include "issues related to pensions, starting with passing the Butch Lewis Act," which would provide federally backed loans to underfunded multiemployer defined benefit pension plans.

The Butch Lewis Act passed the Democratic-led House last year but has not been brought up for a vote in the Republican-led Senate.

Social Security Payroll Taxes

Biden has proposed requiring high-wage earners to pay Social Security taxes on a higher percentage of their income. Currently, employees and employers each pay 6.2 percent from wages to fund Social Security, for a combined rate of 12.4 percent, but the tax only applies on earned income up to a set amount per year, which will be $142,800 for 2021.

According to analysts at the University of Pennsylvania's Wharton School, the Biden plan increases Social Security taxes by creating a "doughnut hole" in the payroll tax structure. While earnings immediately above the current tax cap would continue to be exempt from Social Security taxes, earnings above $400,000 would be taxed at the 12.4 percent rate.

The new taxes on earnings above $400,000 would not trigger additional benefits.

"This is intended to make up some of the current gap between Social Security inflow and outflow while not punishing what might be referred to as the upper middle class," Lowell said.

If the proposal were enacted, however, employers could face pressure to raise or "make whole" the pay of executives and other high earners, to compensate for a larger payroll tax bite, compensation specialists suggested.

Financial Transaction Taxes

Biden supports creating new financial transaction taxes, "where every time someone buys or sells a security, it would trigger a tax to pay for new government programs," Henson said. "The biggest purchasers, by volume of securities, are retirement plans, so if you start to build in additional taxes, unless there's a carve-out for retirement plans," 401(k) participants would be subject to the tax.

TOP Income Tax Rates

The Biden plan proposes to raise the individual income tax rate on incomes higher than $400,000 to 39.6 percent from 37 percent. "This change may cause some companies with high earners to rethink their total rewards strategy," Lowell said. "Income deferral opportunities will likely become more attractive to higher-wage earners. We expect this will create greater interest in nonqualified deferral opportunities. And for companies with defined benefit plans, we expect this will increase interest in finding ways to creatively move nonqualified benefits into their defined benefit plans."

Fiduciary Rules

In July, the U.S. Department of Labor (DOL) proposed guidance that would change requirements for advisors who recommend investments to retirement plan participants. The proposed fiduciary standard would still require advisors to act in participants' best interests and to avoid conflicts of interest when recommending specific investments, but it is less restrictive regarding how advisors are compensated than a 2016 rule by the Obama administration, which was struck down in 2018 by the 5th U.S. Circuit Court of Appeals.

The Democratic party platform says Democrats will "take immediate action to reverse the Trump administration's regulations allowing financial advisers to prioritize their self-interest over their clients' financial well-being."

In October, the U.S. Department of Labor (DOL) released a final rule requiring fiduciaries to select investments for employer-sponsored plans based on financial risk and return factors, rather than nonfinancial factors such as environmental, social and governance (ESG) criteria. A related DOL proposal, issued in September and not yet finalized, would stop retirement plan fiduciaries from casting corporate-shareholder proxy votes in favor of social or political positions that don't advance the financial interests of retirement plan participants.

Aron Szapiro, director of policy research at investment data firm Morningstar, said of the finalized rule that "a Biden administration would probably want to revisit this; it's just not the consensus in the Democratic party," reported wealthmanagement.com.

Related SHRM Articles:

Congress Considers a New Round of Retirement Legislation, SHRM Online, November 2020

What's Ahead for Health Care Under Biden?, SHRM Online, November 2020

For 2021, 401(k) Contribution Limit Unchanged for Employees, Up for Employers, SHRM Online, October 2020


Benefits
Benefits Compliance
Fiduciary Duty
Retirement Benefits

Artificial Intelligence in the Workplace

​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.



Related Content

Kelly Dobbs Bunting speaks onstage at SHRM24
(opens in a new tab)
News
Why AI+HI Is Essential to Compliance

HR must always include human intelligence and oversight of AI in decision-making in hiring and firing, a legal expert said at SHRM24. She added that HR can ensure compliance by meeting the strictest AI standards, which will be in Colorado’s upcoming AI law.

(opens in a new tab)
News
A 4-Day Workweek? AI-Fueled Efficiencies Could Make It Happen

The proliferation of artificial intelligence in the workplace, and the ensuing expected increase in productivity and efficiency, could help usher in the four-day workweek, some experts predict.

(opens in a new tab)
News
How One Company Uses Digital Tools to Boost Employee Well-Being

Learn how Marsh McLennan successfully boosts staff well-being with digital tools, improving productivity and work satisfaction for more than 20,000 employees.

HR Daily Newsletter

Stay up to date with the latest HR news, trends, and expert advice each business day.

Success title

Success caption

Manage Subscriptions
  • About SHRM
  • Careers at SHRM
  • Press Room
  • Contact SHRM
  • Book a SHRM Executive Speaker
  • Advertise with Us
  • Partner with Us
  • Copyright & Permissions
  • Post a Job
  • Find an HR Job
Follow Us
  • LinkedIn
  • Facebook
  • Twitter
  • Instagram
  • YouTube
  • SHRM Newsletters
  • Ask An Advisor

© 2025 SHRM. All Rights Reserved

SHRM provides content as a service to its readers and members. It does not offer legal advice, and cannot guarantee the accuracy or suitability of its content for a particular purpose. Disclaimer


  1. Privacy Policy

  2. Terms of Use

  3. Accessibility

Join SHRM for Exclusive Access to Member Content

SHRM Members enjoy unlimited access to articles and exclusive member resources.

Already a member?
Free Article
Limit Reached

Get unlimited access to articles and member-exclusive resources.

You've reached the limit of 1 free article this month. Join to access unlimited articles and member-only resources.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join the Executive Network and enjoy unlimited content.

Already a member?
Free Article
Exclusive Executive-Level Content

This content is for the SHRM Executive Network and Executive Content Subscription members only.

You've reached the limit of 1 free article this month. Join and enjoy unlimited access to SHRM Executive Network Content.

Already a member?
Unlock Your Career with SHRM Membership

Please enjoy this free resource! Join SHRM for unlimited access to exclusive articles and tools.

Already a member?

Your membership is almost expired! Renew today for unlimited access to member content.

Renew now

Your membership has expired. Renew today for unlimited access to member content.

Renew Now

Your Executive Network membership is nearing its expiration. Renew now to maintain access.

Renew Now

Your membership has expired. Renew your Executive Network benefits today.

Renew Now