S.1222 - Financial Freedom Act of 2025 (119th Congress)
Summary
The Financial Freedom Act of 2025 (S.1222) aims to prevent the Secretary of Labor from restricting the types of investments offered to participants in individual retirement accounts (IRAs) who have control over their assets. The bill amends Section 404(a) of the Employee Retirement Income Security Act of 1974 (ERISA). It ensures fiduciaries provide a broad range of investment options without favoring or disfavoring specific investment types, based on risk-return characteristics.
Expected Effects
If enacted, this bill would grant individuals more autonomy over their IRA investments by limiting the Secretary of Labor's regulatory power over investment choices within self-directed brokerage windows. It would also shift investment decision-making power towards individual account holders.
Potential Benefits
- Increased individual control over retirement investments.
- Potential for higher returns through diverse investment options.
- Reduced regulatory burden on self-directed IRAs.
- Fiduciaries are still required to provide a broad range of investment alternatives.
- Could spur innovation in investment products tailored to individual needs.
Most Benefited Areas:
Potential Disadvantages
- Increased risk of poor investment decisions due to lack of regulatory oversight.
- Potential for exploitation by unscrupulous investment schemes.
- May disproportionately benefit wealthier individuals with more investment knowledge.
- Could lead to under-diversification of retirement portfolios.
- May increase complexity for individuals managing their own retirement accounts.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with general principles of economic liberty and individual autonomy, though the Constitution does not explicitly address retirement investment regulations. The Tenth Amendment could be invoked, arguing that powers not delegated to the federal government are reserved to the states or the people; however, ERISA already establishes a federal role in retirement plans. The bill seeks to limit the scope of federal intervention, potentially aligning with a more limited view of federal power.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).