1. A promise: No cuts to Social Security. Trump has said he’d like to “terminate the payroll tax” if reelected. Payroll taxes fund Social Security and Medicare. But Trump has vowed to never cut Social Security. Under an Aug. 8 presidential executive order, employers can defer that 6.2% tax for employees whose taxable wages are less than $4,000 during a bi-weekly pay period — equivalent to roughly $104,000 annually — from Sept. 1 through Dec. 31. But it must be repaid by May 1, 2021.
2. Pension guarantees could be shored up. As set out in the administration’s 2021 budget, the Pension Benefit Guaranty Corp.’s (PBGC) multiemployer program, which insures the pension benefits of 10 million workers, is at risk of insolvency by 2025. Trump’s budget proposes to add new premiums to the multiemployer program, raising approximately $26 billion in premiums over the next 10 years. At this level of premium receipts, the program is projected to remain solvent over the next 20 years.
3. Small businesses could get easier access to health insurance. In an executive order, Trump directed the Labor secretary to consider expanding access to affordable health coverage for small businesses. The administration’s 2021 budget increases funding for Labor to develop policy, regulations and enforcement capacity to enable more employers to adopt the Multiple Employer Welfare Arrangement model and expand access to health insurance for American workers.
4. Labor's fiduciary rule would stay intact. Labor’s prohibited transaction exemption to align with the SEC’s Regulation Best Interest is expected to be finalized by year-end. It allows the receipt of a commission when providing investment advice, allowing brokers to receive “a wide variety of payments that would otherwise violate” the prohibited transaction rules under ERISA. Critics argue the PTE will put retirement savers at risk because the advice will not be held to a true fiduciary standard.
“Trump has no plan for retirement savings, other than the Secure Act which was already done,” IRA specialist Ed Slott of Ed Slott & Co., told ThinkAdvisor in a recent email. “It’s too early to see the results of expanded access to retirement plans, especially this year when many employees are either trying to hold on to their jobs or have already been let go or laid off.”
That said, “one thing a Trump administration might do is lighten up on the burdensome regulations that advisors must go through especially on providing rollover advice. Given all the lay-offs, people need advice on what to do with their 401(k)s more than ever,” Slott said.
The Labor Department’s Employee Benefits Security Administration released in mid-August an interim final rule intended to help workers estimate how their current savings in a defined contribution plan translate into lifetime monthly payments.
The rule implements Section 203 of the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019.
Read the gallery above to see how the retirement planning landscape could change under a Trump administration.
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