President Donald Trump signed an executive order Friday afternoon during a visit to Charlotte, North Carolina, under the banner Securing Americans’ Retirement, directing the Labor Department to ease rules on small-business multiple-employer retirement plans and instructing the Treasury Department to review required minimum distributions from 401(k)s and IRAs.
The executive order is intended “to extend the incredible benefits of retirement savings accounts, such a big thing, to American workers employed at small businesses all across our nation,” Trump said during his remarks.
“As we head into Labor Day, our nation pays its gratitude to the hardworking men and women who make our country great,” Trump said.
Calling the order a “historic action,” Trump said it would provide “retirement security to countless American workers and their families. We believe all Americans should be able to retire with the confidence, dignity and economic security that they want.”
Continued Trump: “401(k)s have broken every record in the history of the 401(k) world, in terms of percentages up.”
Trump stated that the “complexity of current federal regulations makes it extremely difficult for small businesses to afford retirement savings accounts for their great employees. While large companies can afford to deal with these burdensome regulations … small companies just can’t handle it.”
As a result, “half of Americans working at small businesses with fewer than 100 employees have not had access to 401(k)s or other retirement plans,” he explained.
“That’s why I’m taking very bold action to lower the costs of retirement plans so that they can become an affordable option for businesses of all sizes.” Small businesses, Trump said, “will no longer be at a competitive disadvantage and small business workers will now be treated more fairly and have more choices.”
Trump explained that his executive order reduces “regulatory barriers” allowing small businesses to creating “low-cost association retirement plans,” also called multiple employer plans, or MEPs.
Labor Secretary Alexander Acosta said at the event that Trump’s order comes as “our economy is strong.” Second-quarter GDP, he said, “was recently revised upward to 4.2%.”
On Thursday, Labor reported that initial jobless claims “are quite literally lower than they have ever been in my lifetime,” Acosta continued.
“Today’s action by President Trump is designed to make it easier for Americans to channel some of that rich economic opportunity, not just into today but into savings for their future.”
Acosta stated that about 42 million Americans do not work for a large corporation, but for small businesses. “Most of these small businesses cannot provide access to the same quality 401(k)s.”
While not discussing the Treasury directive on RMDs during his remarks, a “fact sheet” of Trump’s order asks Treasury to review the rules on RMDs ”from retirement plans to see if retirees could keep more money in 401(k)s and individual retirement accounts for longer.”
The Internal Revenue Code requires savers to start taking RMDs, calculated on the basis of life expectancy, at age 70½.
Paul Schott Stevens, president and CEO of the Investment Company Institute, said in a Friday statement that ICI also “supports updating the calculations [for RMDs] to reflect continually improving life expectancy. We welcome, and are sure that many retirees will welcome, the added flexibility that the administration is considering.”
Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association also stated Friday that SIFMA supports a review of current RMD rules “to allow seniors to leave funds in certain retirement accounts longer.”