What the “One Big Beautiful Bill Act” Means for Your Retirement

On July 4, 2025, President Trump signed HR1, the “One Big Beautiful Bill Act”, into law. While the name may raise eyebrows, the legislation itself introduces substantial changes that plan sponsors, HR teams, and employees alike should pay close attention to.

This sweeping tax and benefits package builds on the 2017 Tax Cuts & Jobs Act and is packed with new provisions that could affect how companies structure their benefits and how employees save for retirement.

What You Should Look out for:

1. New Employer Contribution Option: “Trump Accounts” for Minors
The Act introduces a new type of IRA designed specifically for minors under 18. Known as “Trump Accounts,” these are employer-contributable accounts that allow up to $2,500 per year per minor, with contributions excluded from the employee’s gross income. While not a workplace retirement plan in the traditional sense, these accounts create a new way for employers to support their employees’ families and long-term savings goals. Plan sponsors should monitor how custodians and recordkeepers incorporate these accounts, and whether they might be included in future total rewards strategies.

2. Student Loan Repayment Benefits Are Now Permanent
Employers can now permanently contribute up to $5,250 per year toward employees’ student loans through educational assistance programs. This is a powerful tool for attracting and retaining talent, especially among younger employees, while supporting their ability to simultaneously save for retirement. For retirement plan sponsors, it’s worth exploring how this benefit might work alongside 401(k) matching programs or SECURE 2.0’s student loan match provision.

3. Expansion of Family and Medical Leave Tax Credit
The law makes the paid family and medical leave business credit under Section 45S permanent. This can help offset costs for employers offering generous leave policies—and may free up budget to enhance retirement plan benefits or improve plan design in other ways.

-  Section 45S of the Internal Revenue Code provides a business tax credit to employers that offer paid family and medical leave to their employees. Originally introduced as part of the 2017 Tax Cuts and Jobs Act, this provision was designed to encourage companies to provide paid leave voluntarily, especially if not already mandated by state or local laws.

The credit was temporary, but the One Big Beautiful Bill Act has now made it permanent starting in 2026, making it a valuable long-term planning tool for employers.

4. More Flexibility in Benefits Design
Starting in 2026, the amount employees can set aside tax-free to help cover child care expenses (through Dependent Care Assistance Programs, or DCAPs) will go up. This gives employers a chance to offer more generous child care benefits.

At the same time, more health insurance plans will qualify for Health Savings Accounts (HSAs), including Bronze and Catastrophic plans from the ACA (Affordable Care Act). Plus, telehealth visits will continue to count as a covered service, even before the health plan deductible is met.

Altogether, these updates give employers more ways to build a well-rounded benefits package,  one that supports both short-term needs like child care and long-term goals like retirement saving.

What Employers Should Do Next

While the Act doesn’t change 401(k) contribution limits or plan administration rules directly, its impact on benefits strategy and employee financial wellness is significant. These new provisions give employers more tools to support employees' short- and long-term financial goals, which ultimately affects engagement with retirement plans.

In the coming months, we expect further guidance from the IRS on how to implement and report some of these changes, including tip and overtime deductions, Trump Accounts, and qualified plan coordination.

As always, our team is here to help you assess how these changes align with your retirement plan strategy and broader employee benefits goals. If you have questions or want to explore how these provisions may benefit your workforce, let’s set up a time to talk.

Contact Us to Schedule a Meeting

Disclosures:

Exp 7/27 8174368.1