How The New Budget Affects Your Retirement Plan

The two-year budget deal recently signed by President Trump affects investors in many ways. Since few among us have the patience to read a 652-page government document in their limited free time, we’ve consolidated some of the more noteworthy changes, as they pertain to qualified retirement plans and individual retirement accounts (IRA).

IRS Relief

Under the new deal, employer-sponsored accounts or IRA’s that have been levied by the IRS are given a bit of relief. In circumstances where funds are levied from such accounts by the IRS then afterwards returned to the investor, the money, along with interest earned, can be contributed back into the retirement plan or IRA in a lump sum and treated as a rollover.

Hardship Withdrawals

Effective for plan years after December 31, 2018, the new bill amends regulations surrounding hardship withdrawals from your retirement accounts.

Originally after claiming a hardship withdrawal the investor faced a 6-month prohibition on contributing back into the retirement plan, but under the bill this probation period would be removed. Additionally, access to hardship withdrawals is now extended to profit sharing or stock bonus plans, qualified non-elective contributions, qualified matching contributions and the earnings accrued on these contributions. It also eliminates the requirement that a participant take all available plan loans before taking a hardship withdrawal.

Pensions

As we have mentioned in past blogs, pensions across the country are at a point of crisis. This new budget plan recognizes that and calls for the assembly of a Joint Select Committee to Solve the Multi-employer Pension Crisis. This team aims to introduce bipartisan legislation to address the pension issues by December of 2018.