TAX REFORM + RETIREMENT
Tax Reform was one of Candidate Donald Trump’s major campaign platforms. And as President, Trump continues to place Tax Reform as a key agenda item for the new administration. Trump’s basic goals for tax reform are to grow the economy and create millions of jobs; simplify our burdensome tax code, and provide tax relief to individuals and businesses.
How will potential changes in tax code affect retirement savings? Currently, the White House vows to protect retirement savings. However, some fear that Congress will look to use 401(k) plans to offset tax cuts. Ideas that have been floated by the Congressional Budget Office (CBO) and Congress are to lower the maximum annual 401(k) contribution from $18,000 to $16,000 and to eliminate the age 50 catch-up provision. Mandating some level of Roth contributions in place of pre-tax contributions is another idea under consideration. The conversation on requiring Roth contributions has included a wide range of options such as mandating 100% Roth, 50% Pre-tax and 50% Roth, and requiring the first $2,500 or some other threshold level as pre-tax with the remainder as Roth.
Comprehensive Tax Reform is far from being finalized. Randall + Hurley is keeping a sharp eye on how the Tax Reform proposal will affect 401(k) plans, and other similar retirement savings vehicles. We will keep you updated as policy is formed.