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Trump Expected to Order Review of 401(k) Withdrawal Rules

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President Donald Trump is expected to sign Friday afternoon at 2:35 p.m. an executive order directing the Labor Department to remove regulatory barriers that impede small businesses from offering retirement plans as well as directing the Treasury Department to review extending the time retirees can keep funds in tax-deferred retirement accounts like 401(k)s.

Trump’s executive order is expected to open the door to multiple-employer plans, or MEPs, and initiate a Treasury review of the current rules that require withdrawing funds from 401(k) plans and other retirement savings accounts when retirees reach age 70 ½.

Labor Secretary Alexander Acosta along with Linda McMahon, administrator of the Small Business Administration, were expected to be at the signing with Trump in Charlotte, N.C.

“President Trump’s executive order is a significant step forward and removes one of the most substantial obstacles for small-business employers to offer employees opportunities to gain access to a workplace retirement savings plan,” said Cathy Weatherford, president and CEO of the Insured Retirement Institute, in a Friday morning statement. “We appreciate the president’s leadership today that will help address a compelling need to help Americans increase retirement savings.”

Weatherford added that “forcing retirees to make minimum withdrawals from retirement accounts even if they don’t need the money denies older Americans the ability to continue to grow their savings.”

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As Americans are living longer, she said, “their retirement years are increasing, which will require more savings.”

Industry officials hope Trump’s executive order will spur passage of the Retirement Enhancement and Savings Act of 2018, S. 2526, bipartisan legislation reintroduced on March 9 by Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore.

The RESA bill includes language to make MEPs more attractive by eliminating barriers to their use and improving the quality of MEP service providers.

A similar version of the bill was first introduced in 2016 and passed the Senate Finance Committee.