Actually in doing a little research .... many sources are reporting that Trump's tax plan will have a very direct negative affect on retirees, those heading into retirement, retirement savings plans, and seniors. Lower tax brackets are being eliminated forcing those into a higher tax bracket. The original tax brackets that he proposed while campaigning are quite different from what he is currently proposing. Those who are receiving pensions; their COLA will be eliminated and no longer allowed; in other words $$ that they have been putting towards their retirement will see government interference on their pension plans. IRA's and 401K's may be affected as well.
Trump’s proposed retirement changes would have major impacts on current feds and retireesSpecifically, the budget calls for:
An increase in employee contributions by 1 percent each year for the next six years,
An elimination of the cost-of-living adjustment (COLA) for current and future Federal Employee Retirement System (FERS) participants,
Cutting the COLA by 0.5 percent for Civil Service Retirement System (CSRS) participants of what the typical formula currently allows.
The Washington Post first reported these specific changes to the federal retirement system, which include other proposals, such as basing future retirement benefits on the average of an employee’s highest five years of salary. Currently, retirement benefits are based on an employee’s length of service, salary and highest three-year average salary.
Federal financial experts are most worried by two specific proposals: increasing employee contributions and eliminating the COLA for FERS participants.
These changes, they say, may force current employees to delay their retirements in order to put more money in the Thrift Savings Plan (TSP), and they would certainly decrease an employee’s monthly take-home pay with higher annuity contributions. Combined, these proposals have the potential to cause real hardship, said Art Stein, a financial planner and investment manager.
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It means that the purchasing power of the FERS annuity is going to decrease every year,” he said. “How much will solely depend on how high the inflation rate is. Although the inflation has been low for some time, there’s no reason to expect that to continue into the future. I really worry about people who are already retired, because retirement planning has been based upon the
promises and guarantees from the federal government about their retirement annuity, and all of the sudden they’re going to see a big decrease in future benefits.”https://federalnewsradio.com/retirement/2017/05/trumps-proposed-retirement-changes-would-have-major-impacts-on-current-feds-and-retirees/How Trump’s tax plan may affect your 401(k) http://www.marketwatch.com/story/how-trumps-tax-reform-will-affect-your-retirement-2017-04-26Trump's tax plan could affect your retirementhttps://www.aol.com/article/finance/2017/01/17/trumps-tax-plan-could-affect-your-retirement/21656698/What the Trump Tax Plan Means for Your RetirementRetirement Plan Changes -It remains unknown at this time whether the Trump administration plan will affect retirement plans such as your IRAs or 401(k)s. When asked at an April 27 press conference whether the Trump plan protected tax breaks for 401(k)s, Press Secretary Sean Spicer would not confirm. However, administration officials quickly voiced support for keeping current 401(k) rules in place for now, even though the one-page plan they released does not mention any such protection.
With IRAs, things become even murkier because in addressing Spicer’s comments, administration officials specified that contributions to 401(k)s are not deductions and would therefore be protected. However, IRA contributions are deductions because they are contributed after income is received. The Trump tax plan does not specifically protect deductions for IRA contributions the way it does for deductions for home ownership and charitable contributions.
The administration has expressed support for retirement plans. However, there are concerns about potential large deficits due to the tax breaks. This may result in Congress looking to raise revenues by eliminating or reducing retirement plan benefits at some point in the future. It is too soon to say for sure, but it would not be inconceivable to think that benefits like the stretch IRA or cost of living adjustments to retirement plans could find themselves on the chopping block for budget purposes during a late-night legislative session in Congress.
Roth IRA Tax Planning -The Trump tax plan, if it becomes a reality, will change the tax landscape for many individuals. Many may end up in lower tax brackets. This may be a good time to take advantage of being in a lower tax bracket, and convert pre-tax accounts to Roth accounts. This may be especially true if those predicting deficits as a result of the tax cuts turn out to be right. At some point, taxes will have to be raised to pay the bills, and having a Roth account that has already been taxed at lower rates will be a smart move.
https://www.irahelp.com/slottreport/what-trump-tax-plan-means-your-retirement
