Tip Of The Month - Pending Retirement Plan Changes

| September 18, 2018
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President Trump recently signed an executive order that will review the rules governing retirement plans. Among the issues under consideration is the timing of mandatory distributions from plans. Specifically, the length of time over which individuals are required to take taxable distributions after reaching age 70-1/2 may be lengthened. We do not as yet know what the changes will be, if any, but any lengthening of distribution periods may have significant tax and income consequences for our clients. We will be recommending that our clients see us to update their financial plans to reflect any new rules.

A further intention of the executive order is to reduce the financial burden on small employers who wish to establish plans for their employees. Current financial regulations make establishing retirement plans difficult or impossible for small employers. Many of the best-known sponsors of retirement plans have significant minimum initial amounts before they accept a plan. Clearly, this represents an insurmountable obstacle for small companies and startups. President Obama made a similar effort with the myRA program. Unfortunately, the program did not receive significant public interest and is scheduled to be shuttered in September of 2018. It makes sense to review retirement plans in light of the fact that the recent tax changes are designed to promote the establishment and growth of small companies. Adjustments to the existing laws should be designed to further that goal. If these efforts result in concrete changes, we shall also need to adjust plans and strategies for many of our clients. We shall be on the alert for these changes and inform you when we have a clear understanding.

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