With the Election of Donald Trump last week, we can expect a lot of changes. Many impact the retirement plan industry. Since this is Trump 2.0, some of these moves have been telegraphed from his first administration and their priorities.
What We’re Watching Under a New Trump Presidency:
TCJA Extension Pay-Fors: SALT, Pension Law Reform, Rothification
The impact of SALT changes will likely continue to be felt in blue coastal states. Look for pension law reforms targeting executive-level earners ($200k-$500k/year) either through reductions in deductibility or increased taxable amounts. Watch for an increased focus on Roth-ification of retirement plan benefits. All potential ways to generate revenue from higher income earners, but not the ultra-wealthy.
Changes at the DOL: Fiduciary Rule Watered Down, ESG
The Fiduciary Rule likely faces further weakening under the Trump administration, as seen in his first term. This could increase risks for baby boomers in the areas of 401(k) rollovers, high-commission annuity product sales, and costly managed accounts in 401(k) and 403(b) plans.
ESG (Environmental, Social, and Governance) investing in retirement plans is likely to be scaled back if not pronounced DOA. The DOL under Trump is expected to return to its previous stance, focusing on financial returns and risk rather than non-pecuniary factors.
Inflation: Social Security Wage Base Limit, Tariffs as a cloaked version of a VAT
Deregulation and stimulative policies are expected to increase inflationary pressures, which will push the Social Security Wage Base limit even higher. Since 2016, the tax burden on employers and employees has increased by 42% for each party’s portion of FICA taxes, which will continue to rise even further as inflation persists. The good news is that will increase contributions into the ailing Social Security ‘trust fund.’
Tariffs, serving as a de facto VAT, will influence consumer spending and impact retirement savings and incomes from Social Security, 401(k)s, and Roth accounts. As Boomers shift into consumption of wealth mode, tariffs stand ready to eat away at some of that purchasing power.
North Pier will be watching these topics develop as the new administration takes the reigns and will keep you apprised as developments occur. As always, we welcome your thoughts and feedback.
With the Election of Donald Trump last week, we can expect a lot of changes. Many impact the retirement plan industry. Since this is Trump 2.0, some of these moves have been telegraphed from his first administration and their priorities.
What We’re Watching Under a New Trump Presidency:
TCJA Extension Pay-Fors: SALT, Pension Law Reform, Rothification
The impact of SALT changes will likely continue to be felt in blue coastal states. Look for pension law reforms targeting executive-level earners ($200k-$500k/year) either through reductions in deductibility or increased taxable amounts. Watch for an increased focus on Roth-ification of retirement plan benefits. All potential ways to generate revenue from higher income earners, but not the ultra-wealthy.
Changes at the DOL: Fiduciary Rule Watered Down, ESG
The Fiduciary Rule likely faces further weakening under the Trump administration, as seen in his first term. This could increase risks for baby boomers in the areas of 401(k) rollovers, high-commission annuity product sales, and costly managed accounts in 401(k) and 403(b) plans.
ESG (Environmental, Social, and Governance) investing in retirement plans is likely to be scaled back if not pronounced DOA. The DOL under Trump is expected to return to its previous stance, focusing on financial returns and risk rather than non-pecuniary factors.
Inflation: Social Security Wage Base Limit, Tariffs as a cloaked version of a VAT
Deregulation and stimulative policies are expected to increase inflationary pressures, which will push the Social Security Wage Base limit even higher. Since 2016, the tax burden on employers and employees has increased by 42% for each party’s portion of FICA taxes, which will continue to rise even further as inflation persists. The good news is that will increase contributions into the ailing Social Security ‘trust fund.’
Tariffs, serving as a de facto VAT, will influence consumer spending and impact retirement savings and incomes from Social Security, 401(k)s, and Roth accounts. As Boomers shift into consumption of wealth mode, tariffs stand ready to eat away at some of that purchasing power.
North Pier will be watching these topics develop as the new administration takes the reigns and will keep you apprised as developments occur. As always, we welcome your thoughts and feedback.
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