Your retirement accounts may be the biggest component of your net worth. Or maybe those large balances are still only a goal, and you want to know if any changes coming in the next four years will help you get there — or get in your way.
Of the 1,200 or so money-related questions we’ve received from readers in the days since the presidential election, many have been about retirement. We have some answers for what we know and context for what we don’t yet know. Most of them have nothing to do with Social Security; my colleague Tara Siegel Bernard answered questions about that program last week.
But first, here’s an important caveat that is true in any administration, but especially in one like this: For things to change, President-elect Donald J. Trump has to want things to change, act on that desire and then succeed. If lawmakers are involved, they also have to have the desire, follow through and pass legislation.
There will be plenty of noise, but in this particular category, it’s possible that not much of substance will look different four years from now.
What did Mr. Trump say he wanted to change about individual retirement accounts or 401(k)s?
Not much. Neither Mr. Trump’s campaign website nor the Republican Party platform that it pointed to said anything about I.R.A.s or workplace retirement accounts like 401(k)s, with one exception that probably wouldn’t affect many people.
On his campaign website, Mr. Trump sounded off about environmental, social and governance, or E.S.G., funds and their place in workplace retirement plans. During his first term, the Labor Department issued a rule related to what sorts of funds an employer — which must act in employees’ best interest as a so-called fiduciary — can use in those plans.
Pecuniary factors — ones that could have a material effect on risk or returns — had to be primary. The department drew a sharp contrast between that and what it called E.S.G. funds’ “nonfinancial” goals, even though there was ample evidence that such funds perform well and that investors should consider climate and governance.
The complicated rule had the effect of giving employers pause about adding E.S.G. funds to the menu of 401(k) and similar plans and using those funds as the default investment for participants who had not yet selected funds on their own. The Biden administration reversed it. Mr. Trump intends to reverse the reversal with an executive action and a change in the law.
What about changes to required minimum distributions from retirement accounts?
Mr. Trump did not address this during the campaign. Last year, federal legislation changed the rules around many of these withdrawals, raising the age when you must begin to 73.
The specifics can get complicated. The Internal Revenue Service has a fact sheet explaining the changes.
Republicans will control both houses of Congress. Is there legislation they may try to pass that could affect how my retirement accounts work?
It’s possible. One high priority for Republicans is extending the tax cuts that Mr. Trump signed into law during his first term. But tax cuts have costs, and any new bill will try to offset those costs in a variety of ways.
Mark Iwry, a nonresident senior fellow at the Brookings Institution who was responsible for retirement policy in the Obama administration, said there was concern in some circles about the possibility of so-called Rothification. When you save money in a 401(k), it goes into your account before you pay income taxes. When you save in a Roth 401(k) or a Roth I.R.A., you pay income taxes on the money — but avoid paying taxes when you withdraw it later on.
If Congress limits the 401(k)-style pretax savings — for instance, by saying only the first $10,000 of 401(k) or similar savings can be free of income taxes while any remaining after-tax savings go into a Roth 401(k), up to the current contribution limits — the government will have more short-term tax revenue. That revenue could offset tax cuts elsewhere.
There is no way of knowing the odds of this happening. But as Mr. Iwry pointed out, it’s worth revisiting Mr. Trump’s comments during the 2017 debate over tax legislation, when he insisted that there would be no changes to 401(k)s.
I might move outside the U.S. in my retirement. What happens to my I.R.A.s and other accounts if I do?
You will probably face restrictions. Have a conversation with the company that has your money and prepare a detailed list of questions about your intended destination and every retirement and other account that you have or might want to open later.
Fidelity has an F.A.Q. on its website for people who live outside the United States, and it gives a general sense of the limits those investors might encounter once they move: Its phone representatives won’t give you advice about things like how to divide your money between stocks and bonds. Grandparents won’t be able to open new 529 college savings accounts. And you can’t buy new shares of mutual funds, though you can keep the ones you have and continue to reinvest dividends and capital gains.
Some people attempt workarounds like maintaining a U.S. address and, sometimes, trying to keep their brokerage firm in the dark about their whereabouts. Companies may not look kindly on that.
Can I receive Social Security benefits if I live outside the United States?
Yes. The Social Security Administration has a “Payments Abroad Screening” tool that allows you to search by country to make sure that any given country is eligible, but most are. New applicants for benefits must elect direct deposit, so you’ll want to have a thorough understanding of how any bank account outside the United States would work.
Have questions about the details? You can call the Social Security Administration for help (1-800-772-1213 — calling right at the opening minute at 8 a.m. can lead to lower hold times, especially later in the month) or visit a Social Security office.
The post How Retirement Rules Might — or Might Not — Change Under Trump appeared first on New York Times.
