Retirement savers and financial companies cheered Thursday. The really big change they feared—a slashing of the amount workers can contribute before taxes to their 401(k) plans—didn’t materialize in the U.S. House of Representatives tax bill.
But it does include some proposed tweaks.
Here are five changes legislators want to make to the workplace accounts, and how they could affect employees in retirement savings plans.
1. Continuing contributions
Currently, someone taking a hardship withdrawal from a 401(k) plan can’t contribute again until six months have passed. The bill would eliminate that restriction.
2. Bigger hardship withdrawals
Right now, participants can only take hardship withdrawals of money they contributed, not matching contributions from their employer or amounts that have appreciated through investments. The proposed change would allow savers to take a withdrawal based on the whole balance.
3. Repaying loans
Currently, if you have an outstanding loan from your 401(k) and lose your job, you generally have to roll that money into an IRA or new employer’s plan within 60 days. If you don’t, the loan becomes taxable and subject to a 10 percent penalty. The bill says a worker who was terminated with a loan outstanding would have until their taxes are due (so April 15 of the following year) to repay it into an IRA or a plan at a new job.
4. Syncing ages
The age when plan participants can take in-service distributions would be synced for 401(k)s and government plans. In-service distributions are withdrawals some employees can make while still working. With 401(k)s, the age to take money out without penalty is 59 1/2, but some state and local governments with 403(b) or 457 plans set the age at 62. The bill would declare the age as 59 ½ for all of these types of defined contribution plans.
5. Nondiscrimination test tweaks
One change would make it easier for defined benefit plans, the predecessor to 401(k)s, that are closed to new participants to pass nondiscrimination tests. Those tests are meant to ensure that the retirement plan doesn’t favor higher-compensated employees over lower-paid workers.Click here to download a pdf of this article, Missile.pdf
Powell on Monetary Policy in his Own Words:
On interest-rate increases
On reducing the balance sheet
On consumer prices
On the Phillips Curve and inflation expectations
On economic growth, unemployment and wages
On using rules to set monetary policy
“There’s a complacency that shale is going to continue to produce at the kind of volumes that we had in the past,” says Jim Brilliant, a portfolio manager for Century Management Investment Advisors in Austin, whose investments include shares in energy-related companies. Output has recently failed to meet expectations. As of June, the U.S. Energy Information Administration expected an average of about 9.3 million barrels a day, more than 220,000 barrels a day higher than companies reported.
"I think that final bill will not be as grand as Donald Trump envisions. It's not going to be as bold. The reason is they're going to phase in aspects of it," said Greg Valliere, chief global strategist with Horizon Investment.Click here to download a pdf of this article, Missile.pdf
Cities across the U.S. often feel the same pinch—trying to manage the typical costs of running a city, such as picking up trash and filling potholes, on top of ballooning retirement obligations and outstanding debts. Several major cities are struggling to keep up.
The Republican-controlled House voted 216-212 to pass a budget blueprint for the 2018 fiscal year. The measure will enable the tax legislation, due to be introduced next week, to win congressional approval without any Democratic votes.Click here to download a pdf of this article, Missile.pdf
The House hopes to pass a budget on Thursday and move one step closer to approving a tax plan. If House Republicans can clear a budget resolution already passed by the Senate, they hope to release a tax bill next week and pass it by Thanksgiving.Click here to download a pdf of this article, Missile.pdf
“The moment of truth has arrived for secular bond bull market!” DoubleLine Capital Chief Investment Officer Jeffrey Gundlach tweeted Tuesday, just before yields touched session highs. “Need to start rallying effective immediately or obituaries need to be written.”
Lots of factors go into the decisions but these companies have made a simple calculation: Cheap labor in Mexico -- as much as a $20,000 saving per worker compared with the U.S. -- is enough to offset the higher costs of any tariff imposed by Nafta’s demise. That math shows how Trump’s America First effort to revive manufacturing faces hurdles.
The latest rounds of talks over the 23-year-old trade treaty ended last week, with Mexico and Canada rejecting hard-line U.S. proposals. Negotiations will resume in November but the ministers agreed to put off any resolution until next year.
Business wasn't great during the third quarter, but things should pick up again through the rest of the year, according the latest survey of business economists.
Profits were squeezed, jobs were harder to fill and materials prices rose in the latest quarter, according to a majority of the National Association of Business Economists. But overall, the group expects sales to continue rising in the last three months of the year.
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