Gary Cohn and Steve Mnuchin at press conference.
In the White House press conference Wednesday outlining the Trump tax-cut proposals, Gary Cohn, director of the National Economic Council gave assurances that retirement savings (as well as homeownership and charitable contributions) “will be protected, but other tax benefits will be eliminated.” On face value, that should provide a measure of relief that 401k deferrals and other retirement savings plans that enjoy favorable tax treatment will not be affected by the sweeping Trump tax reform bill.
However, there are two issues that call into question the value of “face value” under the Trump administration. The first concern is that the outline was just that…an outline. No specifics outside of Cohn’s statements have been given other than an assurance that “details to come; at a later date”.
The second issue has to do with the communication style of the current administration. No judgment, it’s just a very different style of communication than conventional White House dialogue. Welcome to the new world of politics. Journalists and pundits alike are still trying to get a handle on the import of communications and management styles of the Trump Administration and until we get some definitive, concrete bills, nobody really knows what will happen.
Despite the somewhat overt assurance that America’s retirement plans will be left untouched, that does not stop the speculators. And a less-than-sympathetic press will no doubt look to find the cloud in any Trump silver lining. I would strongly suggest that anyone reading into Cohn’s statements that the White House has any intention of altering retirement savings plans is without merit.
Under the current economic climate, and more specifically, analyzing the state of US retirement readiness, a change to the favorable tax treatment of plans such as 401k’s would have a catastrophic affect on tens of millions of Americans, for generations to come. It is not happening. There is a difference between healthy skepticism and bloviating. Sure, the $14 Trillion retirement market may look like a nice place to find additional revenue, but like Social Security, this is sacred ground, even for newcomers like Trump. The probability of retirement plans losing tax-deferred status is near zero.
Aside from the obvious negative impact on retirees, the notion of significantly altering the retirement savings plans of tens of millions Americans is just beyond the scope of serious discussion and would never make it through the Congress (even a heavy-stacked Republican one). This would be instant political suicide. On top of that it would cause a seismic ripple effect into the overall economy. If we are being circumspect on this issue, I would tend to lean to the side of “face value on this one. This one is a non-starter.
Mr. Kelly is an expert in online marketing, search engine optimization, content development and content distribution. He has consulted some of the top brokerages, media companies and financial exchanges on online marketing and content management including: The New York Board of Trade, Chicago Board Options Exchange, International Business Times, Briefing.com, Bloomberg and Bridge Information Systems and 401kTV.
He continues to be a regular market analyst and writer for ForexTV.com. He holds a Series 3 and Series 34 CFTC registration and formerly was a Commodities Trading Advisor (CTA). Tim is also an expert and specialist in Ichimoku technical analysis. He was also a licensed Property & Casualty; Life, Accident & Health Insurance Producer in New York State.
In addition to writing about the financial markets, Mr. Kelly writes extensively about online marketing and content marketing.
Mr. Kelly attended Boston College where he studied English Literature and Economics, and also attended the University of Siena, Italy where he studied studio art.
Mr. Kelly has been a decades-long community volunteer in his hometown of Long Island where he established the community assistance foundation, Kelly's Heroes. He has also been a coach of Youth Lacrosse for over 10 years. Prior to volunteering in youth sports, Mr. Kelly was involved in the Inner City Scholarship program administered by the Archdiocese of New York.
Before creating ForexTV, Mr, Kelly was Sr. VP Global Marketing for Bridge Information Systems, the world’s second largest financial market data vendor. Prior to Bridge, Mr. Kelly was a team leader of Media at Bloomberg Financial Markets, where he created Bloomberg Personal Magazine with an initial circulation of over 7 million copies monthly.