Oct 9, 2017
Trump’s tax plan could be a big win for retirement savers
Whatever you might think of our current president, you can’t say he
doesn’t think big.
The Trump-GOP tax plan just announced has the potential to affect retirement savers in fundamental, long-term ways that could be positive for many Americans. The plan is a long way from reality and is likely to see some changes before becoming law.
For now, here’s the thumbnail version:
• Corporate taxes fall to 20% from the current 35% (and some business deductions end)
• A possible one-time lower rate on repatriated corporate income held abroad, perhaps at 10%
• A 25% rate on “pass-through businesses,” whose owners now pay higher, personal income rates
• Three tax brackets — 12%, 25% and 35% — rather than the current seven
• A near-doubling of the standard deduction, the first dollar of income taxed, to $12,000 per individual and $24,000 for married couples
There’s more, such as a possible refundable child tax credit and the repeal of the estate tax, but let’s focus on what happens to the retirement investor.
If you work and make enough money to save, chances are you save into a 401(k) plan at work or put money into a personal IRA. So far, so good.