UPDATE: Ask the experts: How will Trump's tax proposal affect retirement savers?
By Alessandra Malito, MarketWatch
Pre-retirees will have to look at bracket strategies, estate planning and lack of deductions.
There's a lot Americans still don't know about President Trump's tax proposal, but one thing is certain: regardless the outcome, a change will affect current retirement savers and retirees.
The plan, released late last month (http://www.marketwatch.com/story/what-we-know-and-dont-know-about-trumps-tax-plan-2017-09-29), mentions a 20% corporate tax rate (down from 35%) as well as a three-tiered tax bracket system (12%, 25% and 35%) with an option of a fourth higher rate for highest-income households (this would be a reduction of tax brackets from seven down to three or four). There was also a proposal for a substantially increased standard deduction, and to retire personal exemptions, except for mortgage interest and the charitable deduction.
See: In one chart: Here's how much you can expect to gain from Trump's tax plan (http://www.marketwatch.com/story/in-one-chart-heres-how-much-you-can-expect-to-gain-from-trumps-tax-plan-2017-09-29)
Where do retirement savers and retirees stand? Though not certain, some in the financial services industry are worried the tax proposal will mean the demise of 401(k) plans, the employer-sponsored retirement savings accounts where employees can stash pre-tax dollars. Speculation has been swirling that the government may "Rothify" (http://www.marketwatch.com/story/advocates-fear-trump-tax-plan-may-rothify-401k-plans-2017-09-28) these accounts, which means that the money would be taxed before being deposited into the account. Others aren't exactly worried, saying retirement savers with money in the stock market will benefit because tax cuts means more money for corporations (and therefore, solid returns for you, the shareholder (http://www.marketwatch.com/story/why-trumps-tax-plan-could-be-a-big-win-for-retirement-savers-2017-09-28)).
Here's what else retirement savers and retirees alike should look for:
Ian Weinberg, Family Wealth & Pension Management, Woodbury, N.Y.