Washington wants to help workers save more in their 401(k)

Our daily roundup of retirement news your clients may be thinking about.

Trump to sign executive order on retirement savings
President Donald Trump is expected to issue an executive order for the Treasury Department to review the rules that require retirees to start taking mandatory distributions from retirement accounts once they turn 70 1/2, and to consider making it easier for small businesses to offer employees 401(k) plans, according to this article on The Wall Street Journal. The executive order is also expected to prompt the government to make it easier for small businesses to band together and offer 401(k) plans to their workers. “These plans like other plans have large overhead and department costs. Large employers can enjoy economies of scale by spreading those costs among larger groups of workers. Small businesses don’t have the luxury of doing that,” says an expert.

Lawmakers Want to Help You Save More in Your 401(k)
Lawmakers are seeking to pass the Retirement Enhancement and Savings Act of 2018, which will allow workers to save more while encouraging employers to offer more retirement savings options, according to this article from Kiplinger. The legislation will make it easier and cheaper for small employers to work together to produce a retirement multiple employer plan. The legislation would also encourage employers to include annuities in 401(k)s by giving employers protection if employees sue due to high fees.

Connecting the dots between Social Security and IRAs in your retirement planning
Clients can look at their Social Security as part of their investment mix: they can either boost their equity percentage by about 5% or 10% of their portfolio, or they could also trim their stock-market holdings because they have Social Security as a backstop, according to this article in the Arizona Republic. Clients can also hold off claiming Social Security benefits by tapping into IRAs first. Social Security payouts increase roughly 8% every year a beneficiary waits until age 70 to file so people with modest income maybe better off making IRA withdrawals first because tax deferral in IRAs are most advantageous for people in high tax brackets.

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