The events over the past week have significantly changed the likelihood that the federal government is heading towards another shutdown, although this time it would only involve certain agencies. So where do things stand and which agencies would be impacted?
Congress faces a Jan. 30 deadline (by midnight Friday) to enact the remaining appropriations bills for fiscal year 2026 or else the respective government agencies that have not received their funding for the year would be forced to shut down beginning Jan. 31. Note that FY 2026 started on Oct. 1, 2025, and ends on Sept. 30, 2026.
These agencies include Defense, Education, Health and Human Services, Homeland Security, Housing and Urban Development, Labor, State, Transportation, and Treasury. The agencies that are not affected include Agriculture, Commerce, Energy, Interior, Justice and Veterans Affairs. This is because their funding was enacted previously in other funding bills.
Just a week ago, the talk of a shutdown was not on the horizon, but that changed after the deadly shooting(s) in Minneapolis, after which numerous Democrats called for changes to the Department of Homeland Security — particularly to Immigration and Customs Enforcement (ICE) — before voting on the consolidated appropriations bill (H.R. 7148) that includes funding for the remaining agencies.
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The House has already approved this bill (and is currently in recess for the week), but the U.S. Senate on Thursday failed in a 45-55 vote to move forward with the bill (including eight Republicans who voted with the Democrats). In the Senate, it takes 60 votes to limit debate, meaning it will take all Republicans and at least seven Democrats (or Independents) to move forward.
It’s not clear on what the next steps are, but Senate leaders from both parties and the Trump administration reportedly are in discussions to either strip out the Homeland Security portion or amend it in the existing legislation. If either of those scenarios occur, the House would then have to approve what the Senate sends back — but the chamber is currently scheduled to be out until Monday, meaning a shutdown appears more likely without a continuing resolution. Note that a short-term CR is also being discussed to give the lawmakers more time to negotiate.
Retirement Policy Impact
From a retirement policy standpoint, this would affect the Department of Labor, including the Employee Benefits Security Administration (EBSA), along with the Treasury Department, which includes the IRS, just as the 2025 tax season kicks off.
During the government shutdown this past Fall, the DOL issued a contingency plan for its operations, but it does not appear the department has issued one this time around (at least not yet). In general, essential personnel are still required to show up for work, but non-essential personnel are typically prevented from doing so.
Based on the previous plan, various tasks at EBSA would cease, including compliance assistance, regulatory and research activities, audits, compliance assistance, and IT support not dedicated to excepted activities. Activities that would continue include criminal investigations, enforcement, and situations that require immediate attention, such as life-threatening situations or when retirement benefits are withheld, preventing the purchase of life-sustaining necessities.
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As to EBSA personnel, the previous plan showed that 504 of the agency’s 668 employees would be furloughed, leaving 164 (the assistant secretary would be exempt). The contingency lists 117 of those 164 as being “not subject to furlough” because their “compensation is financed by a resource other than annual appropriations.”
Regarding the IRS, taxpayers and businesses would likely face delays on nearly every front. Refund processing would likely slow, and customer service lines would go unanswered. In addition, the Tax-Exempt and Government Entities division, which oversees retirement plans and Form 5500 filings, would likely only keep fewer than 50 staff working nationwide.
The Pension Benefit Guaranty Corporation (PBGC) is financed through insurance premiums and not annual appropriations, and would continue as normal during a shutdown. The Social Security Administration also would not be impacted.
Meanwhile, prior to the situation in Minneapolis, the bill that Congress released and was headed for passage would fund EBSA at $191.1 million, which was the same funding level as the last fiscal year. Presumably that level will not change in whatever compromise agreement surfaces. A previous proposal from the House of Representatives would have cut $10 million from EBSA.