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Election Update and Your Retirement Accounts – Episode 259

election update and your retirement funds

In this special edition of Adam Talks, IRA Financial’s Adam Bergman Esq. discusses the election update and your retirement funds as it looks like Joe Biden will be the next president, while the Democrats hold the House and the Republicans will seemingly hold the Senate.

Please note: this episode was recorded the Thursday after Election Day. Even now, we are still not completely sure how the government will stand come January. It appears that Joe Biden will be the next president. We know the Dems will control the House. There are two runoffs being held in Georgia to determine who will have the Senate majority. What does this all mean for you? Here’s Mr. Bergman with an election update and your retirement funds.

What we Know Right Now

Joe Biden is now the president-elect of the United States. Obviously, President Trump has not conceded the election as of this writing. We know for sure Georgia will be going to an automatic recount. As it stands, Biden is projected to win the state, along with several others. Of course, nothing is official until the electoral college casts its votes for the winners of each state.

Just as important is the race to control the Senate. Again, it’s Georgia at the center of it all. Its two Senate seats will be contested in a runoff election on January 5, 2021. Presumably, the Republicans have 50 Senate seats locked up already, while the Democrats have 48. The Democratic candidates would both have to win the runoffs for them to take control of the Senate. As Vice President, Kamala Harris would be the tie-breaking vote, meaning the Dems have control of the Senate if it is a 50/50 split.

Of course, this will have a huge impact as to what the president-elect will be able to pass. If the Republicans remain in control of the Senate, many of Joe Biden’s proposed changes would probably not come to fruition. Sweeping tax changes, where high income earners would see higher taxes and low- and middle-income Americans would see higher deductions, would not get passed into law. You can check out Adam’s recent episode where he discusses all of Biden’s retirement proposals. Proposals that won’t happen if the Democrats do not take the Senate.

What is Possible for Retirement Savers?

The first rule, that would affect many retirement savers, is the fiduciary rule. The Obama administration tried to put out more rules for financial advisors and IRA accounts. However, that was kicked out by the courts. There is an SEC rule out there that may be reexamined. Obviously, it’s important that fiduciaries and advisors always put their clients first.

Another Obama-era system was the State IRA. States would require small businesses (but not too small) to offer an IRA or 401(k) plan to their employees. There may also be an auto-enrollment feature, so that each employee is in the plan when they start working for the company. While it’s a great thought, the investment and caps are limited. Further, the costs and administrative duties shouldn’t fall onto these businesses, who may not be able to afford it. However, it’s still a great way to help Americans save for retirement.

We can also expect an expansion of IRS Form 5500, which is an information form for some plans, such as a Solo 401(k). The idea is to modernize is make clear all fees and expenses coming out of the plans. Also, we will see regional enforcement offices for regulating retirement systems.

Lastly, the SECURE Act 2.0 is on the table, and it may be easier for it to get enacted once Biden is in office. Again, helping Americans save for retirement is a bipartisan plan.

Conclusion

While things will certainly change under new leadership, don’t expect anything drastic in the coming months. As we all know, everything is a process when dealing with the government. Hopefully, those in charge will do what is right for the American people. We hope you enjoyed this election update and your retirement funds. No matter what, do what you can to save for your future, no matter who you voted for. Remember, pay yourself first!

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