A presidential executive order that could lead to investors keeping their money longer in tax-deferred retirement accounts? What’s not for investment advisors to like?
Especially intriguing to advisors is the language in President Trump’s new executive order calling on the Treasury Department to review its rules for required mandatory withdrawals from 401(k) plans and IRAs.
Generally, investors must start withdrawing funds from these accounts when they turn 70-and-a-half. Allowing investors to stay invested longer also preserves the assets under management advisors manage and AUM fees they charge.
“We get a lot of clients who are dismayed because they have to start taking withdrawals at 70-and-a-half when they don’t need the money,” said Edward Snyder, founder and partner, Oaktree Financial Advisors, Carmel, Ind. “They’ll take the withdrawal, pay the taxes on it and reinvest it, but the only reason they’re taking it out is because they’re required to. If they didn’t have to take the withdrawals, they could keep the money in their IRA tax deferred and it could pass to their beneficiaries.”