Trump to Sign Order to Reevaluate Retirement Account Rules

by | Aug 31, 2018 | NEWS

President Trump signed an executive order Friday which calls for the reevaluation of the rules surrounding individual retirement accounts like 401ks.

The order, which was signed in North Carolina earlier today, is intended to reduce regulatory hurdles, which prevent small businesses from offering competitive retirement packages as well as look into the mandatory age restrictions currently in place.

A press conference announcing the order was held in Charlotte, North Carolina Friday afternoon. Details of the order were also released by several news agencies.

The order will allow small businesses to band together to offer 401k plans to employees and give tax incentives to small businesses who choose to do so, so that the cost of the offering is manageable to employers who would not otherwise be able to offer such incentives.

In an economy where open positions outnumber eligible candidates, this would be a huge boon for small businesses looking to compete with their larger counterparts.

Besides benefiting employees of small businesses, the order also requires that regulatory bodies reevaluate the age restrictions currently in place on retirement plans.

At present, individuals with 401k plans must begin receiving funds from those accounts at age 70½ . The age was determined by IRS life expectancy tables last updated in 2002. Since then the life expectancy has increased from 77 years in 2002 to 78 1/2 years, according to the Federal Reserve Bank.

The executive order asks the Treasury and Labor Department to study the current restrictions and issue new rules with the above issues in mind, as well as an update to the tables.

If the mandatory age increases, retirees will have the option of leaving their funds in place longer, with the potential for the funds to increase over time.

The new rules would benefit Americans with current employer-offered plans, employees of small businesses who aren’t currently offered employer-funded plans, and small businesses who will be able to offer more competitive packages to potential employees.