Trump Pension Order

Last Friday we got an Executive Order on Strengthening Retirement Security in America.

Excerpts and comments follow.

Section 1Policy.  It shall be the policy of the Federal Government to expand access to workplace retirement plans for American workers.  According to the Bureau of Labor Statistics, 23 percent of all private-sector, full-time workers lack access to a workplace retirement plan.  That percentage increases to 34 percent when part-time workers are taken into account.  Small businesses are less likely to offer retirement benefits.  In 2017, approximately 89 percent of workers at private-sector establishments with 500 or more workers were offered a retirement plan compared to only 53 percent for workers at private-sector establishments with fewer than 100 workers.

Those numbers actually seem pretty good. If 23% of full-time private-sector workers lack access to company plans that means 77% have access. Of course many are in 401(k) plans in which they either do not participate or get only token benefits but this Executive Order is not related to the level of the benefits but to access and who knows if MEPs would be as stingy as 401(k)s have been.

Similarly, reducing the number and complexity of employee benefit plan notices and disclosures currently required would ease regulatory burdens.  The costs and potential liabilities for employers and plan fiduciaries of complying with existing disclosure requirements may discourage plan formation or maintenance.  Improving the effectiveness of required notices and disclosures and reducing their cost to employers promote retirement security by expanding access to workplace retirement plans.

Hard to see what they are angling for here. The main notice requirement is the 5500 filing which church and public plans do not have to do. Are they better off? 

Outdated distribution mandates may also reduce plan effectiveness by forcing retirees to make excessively large withdrawals from their accounts — potentially leaving them with insufficient savings in their later years.

I’m with him here, especially for the ludicrous Required Minimum Distribution (RMD) rules for Defined Benefit plans. However, I wonder if Trump might not have a personal stake in this one. His date of birth is June 14, 1946 which means he turned 70-1/2 in 2016 and his first RMD had to be taken by April 1, 2017. With everything going on with him during that period could it have slipped his mind? Without being able to see his tax returns we may never know.

23 responses to this post.

  1. Posted by Anonymous on September 5, 2018 at 1:51 pm

    Since when does a politicans pass a law (or sign an executive order) just to benefit them and their minority. Especially such an outsider who has filled the swamp beyond its capacity!

    Reply

  2. Posted by Tough Love on September 5, 2018 at 3:09 pm

    Quoting ……………….

    “Since when does a politicans pass a law (or sign an executive order) just to benefit them and their minority”

    Oh really ? Like the 20% pass-though tax law change that will VERY materially lower Trump’s taxes (because all of his business are pass-throughs) won’t save HIM a fortune.

    Reply

  3. Posted by Anonymous on September 5, 2018 at 3:17 pm

    BTW; speaking of laughing where’s Stanley when Oliver needs him!

    Reply

  4. Posted by skip3house on September 5, 2018 at 3:49 pm

    wonder why people don’t save individually, as plans I’ve seen are way underfunded. Beyond SocSec. each is better off controlling own, though some may just ‘wing it’.

    Reply

    • “…wonder why people don’t save individually…”
      The vast majority, over 50%, of American PRIVATE sector employees do not earn enough $$$ to even pay the rent on a one bedroom apartment in most large metro areas in the USA. That is the main reason, lack of $$ to even survive. If you cannot pay the rent and are FORCED live on the street, in your car, grandma’s couch, your immediate concern is NOT how you are going to make ends meet 40 years down the road at age 65, but how to STAY ALIVE TODAY.

      Reply

      • Posted by skip3house on September 6, 2018 at 4:22 pm

        You likely missed my way much earlier comments on cruel regressive school property tax hidden in rents/mortgages, instead of based on much fairer ability to pay NJ Income Tax.

        Reply

  5. Posted by Stanley on September 5, 2018 at 3:51 pm

    “I’m with him here, especially for the ludicrous Required Minimum Distribution (RMD) rules for Defined Benefit plans.”

    I don’t know that they are all that ludicrous from the government’s point of view. IMO, it isn’t in the interest of lower income retirees to have a large pile of money in 401K/IRA plans. I have been making withdrawals from my 401K/IRA plans since I turned 59.5 whether or not I needed the money. This year, I will make sure that I make Roth conversion of funds up to the end of the 12% bracket or thereabouts. Folks with large pension payments will pay tax on 85% of their SS benefits, and the Roth advantage isn’t as great for them (if this is incorrect please let me know.)

    From the government’s perspective, a lot of money is set aside in 401K/IRA plans and the government has a need to tax some of it sooner rather than later. The government has committed itself to much outgo and the outgo has to come from some place.

    Reply

    • Posted by Anonymous on September 5, 2018 at 7:48 pm

      ROTH conversions, depending on your situation, can be financially benefical and probably one of the only ways for most of us to maximize tax savings under the recent tax cuts primarly for the rich & corporations. Executive Orders rarely carryove administration’s

      Reply

  6. Posted by readslikeamafiabook on September 5, 2018 at 7:58 pm

    “His first RMD had to be taken by April 1, 2017.”

    Yes he had to take it then. Maybe he did, maybe he did not. You really think the RMD matters to Trump? Come on man. He does not need that distribution so I say no, he doesn’t have a personal stake in it … whether or not we see his tax returns.

    Reply

  7. Posted by readslikeamafiabook on September 5, 2018 at 11:31 pm

    I respect you most times John Bury but I cannot even read a NY Times article, nor anonymous articles or books. But that’s just me. For someone who relies on numbers, I find it troubling that you rely on anonymity. Makes no sense to me.

    Reply

  8. Posted by geo8rge on September 6, 2018 at 4:00 am

    “I’m with him here, especially for the ludicrous Required Minimum Distribution (RMD) rules for Defined Benefit plans. ”

    The original idea behind IRAs were they were an addon for high salary individuals that already had pensions. The RMD basically means rich people cannot store many millions in assets in their IRA forever and bequeath it to their heirs, who can store the assets forever and ever. The lifetime of an IRA is basically the life of the owner as the RMDs continue after death.

    A better scheme is to eliminate IRAs altogether. The worst thing about IRAs is they are a factor in preventing solutions to the pensions crisis because they are constantly being brought up as an alternative. IRAs are a terrible plan, filled with rules and costs and were never meant to be for ‘nest egg’ retirement savings. IMO Better than putting public workers in an IRA is just hand them extra cash.

    Replacing IRAs with say a 0% tax rate on the first $100,000 of dividends and capital gains would be better than an IRA, although it would screw many with huge IRAs.

    Reply

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