Trump Helps the Rich with Retirement Executive Order

President Trump’s new Executive Order instructs the Treasury to to review the rules on required minimum distributions from tax favored retirement plans with the intent to change the rules so elders can keep more money in 401(k)s and individual retirement accounts longer – delaying collecting after age 70 1/2.

The general idea was to help individuals that are financing their retirement through these retirement accounts with more money during their retirement years, but instead it may have an unintended effect: assisting the wealthy with accruing more tax-free income to pass on to their heirs. True, the eventual beneficiaries will have to pay taxes on these inherited funds, but they will still get the opportunity to grow without the risk of income tax or capital gains tax.

Instead of proposing reforms to benefit the wealthy, President Trump should focus on the retirement savings crisis facing the middle class. Among workers aged 55-64, about 33% have no retirement wealth, and the median IRA and 401(k) balance of the remainder is only $60,000. A better plan is to help people accumulate more money and convert to a fair annuity. None of us know when we are going to die, and we need insurance against outliving our money.

See Teresa Ghilarducci, Trump Helps the Rich with Retirement Executive Order, Forbes, September 4, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.