Thanks to President Donald Trump, more Americans will have access to crucial retirement savings plans like 401Ks in the future. On Friday, Trump introduced an executive order that will make it easier for businesses to band together and offer their employees retirement savings plans.
Easing restrictions for American workers
Flanked by Rep. Mark Meadows (R-N.C.) Labor Secretary Alexander Acosta and Small Business Administrator Linda McMahon, Trump signed the order and addressed reporters in an afternoon press conference. He promised reliable retirement prospects for American workers:
Today’s historic action will provide new retirement security to countless American workers and their families. We believe all Americans should be able to retire with the confidence, dignity and economic security that you want.
Prohibitive costs have historically kept smaller businesses out of the mutual funds industry, and for years smaller firms have lobbied the government to make regulatory changes that would make it easier to offer 401K plans to workers. Trump is directing the Labor and Treasury Departments to review current regulations and make it easier for more Americans to become retirement savers.
Current regulations allow corporations within the same industry to pool their resources, thereby reducing costs and making it easier to hire investment personnel to manage their retirement portfolios. Large corporate coalitions have benefitted from being able to spread their costs out across a large pool of workers.
The Labor Department is expected to do away with the requirement that businesses must share common characteristics, such as coming from the same industry, opening the door to smaller firms with fewer resources to take part in these “multiple employer plans.”
“It has the potential to be a real positive for the retirement system,” Michael Kreps, a principal at the Groom Law Group in Washington, told Bloomberg.
Undoing Obama’s unpopular legacy
In addition, the Treasury Department will look at lowering minimum distributions that retirees are forced to draw from their 401Ks and Individual Retirement Accounts. These changes would allow workers to keep more money invested for a longer time.
Trump also wants his administration to examine an unpopular “fiduciary rule” put into place by the Obama administration that requires brokers to always put their clients interests above their own. While this may sound like a worthy endeavor, brokerage firms argue that the regulation makes it too costly for them to work with smaller investors and cuts their clients off from lucrative investments.
The president was happy to issue his retirement savings reforms in North Carolina. “I’m thrilled to be back in Charlotte and the fact is that it’s a very special place, so special, we chose it for the 2020 Republican national convention,” Trump remarked.
Addressing a room full of local small business leaders and supporters, Trump wished the crowd a happy Labor Day and promised to spend the weekend reviewing a proposal to cancel scheduled federal worker pay raises.
The president sent a letter to Congress on Thursday notifying lawmakers of his intent to cancel raises for nearly 2 million civilian federal workers. After a experiencing a vocal public backlash, however, the president appears to be reconsidering that proposal.
“A lot of people were against it. I will take a good hard look over the weekend,” Trump promised.