Displaying items by tag: 401k

Married retirees with an age or income gap can significantly reduce their Social Security tax bill in 2025 by delaying benefits and strategically using the new $6,000 Senior Deduction. For example, when the older spouse defers Social Security until age 70, it not only boosts lifetime income but also helps lower the couple’s current combined income, keeping more benefits tax-free. 

Roth IRA conversions during low-income years and Qualified Charitable Distributions (QCDs) after age 70½ are smart ways to cut taxable income without losing access to deductions. The Senior Deduction becomes especially powerful when couples keep their Modified Adjusted Gross Income (MAGI) under $150,000, the cap for eligibility. 

By timing withdrawals from IRAs to coincide with lower earning years and coordinating the younger spouse’s income, couples can avoid tipping into higher Social Security tax brackets. 

Finsum: A well-planned mix of benefit delays, tax-efficient withdrawals, and smart giving can make retirement income go further while keeping taxes in check.

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The Trump administration is preparing an executive order that would allow 401(k) retirement plans to invest in private equity, a move expected to benefit asset managers seeking access to the $12.5 trillion defined-contribution market. The directive, still under discussion, would build on prior efforts during Trump’s first term to integrate private equity into retirement portfolios, previously limited by legal and fiduciary concerns. 

Currently, most 401(k) investments are concentrated in traditional stocks and bonds, as plan administrators have been cautious about incorporating complex and illiquid assets. 

However, critics warn that such a shift could increase fees and risks for savers while exposing plan sponsors to potential lawsuits. The executive order, if signed, would mark a significant change in U.S. retirement policy and potentially reshape how Americans build wealth for retirement.

Finsum: Private equity could offer retirement savers higher long-term returns and a broader array of investment options, particularly as the number of public companies continues to shrink.

President Trump’s sweeping “Big Beautiful Bill” has stirred surprisingly little excitement within the retirement industry, largely because it leaves the defined contribution landscape mostly untouched. While the law does expand health savings accounts and introduces a limited Social Security tax break for lower-income seniors, it sidesteps deeper retirement reforms that many industry advocates had hoped for. 

Notably, a bipartisan proposal to unlock more than $100 billion in surplus pension and retiree health assets for worker benefits was excluded, frustrating supporters who saw it as a pro-employee measure. On the positive side, the bill preserves current retirement tax incentives, avoiding feared rollbacks that would have impacted savings strategies. 

Outside the retirement space, the bill’s increase to the national debt ceiling could hasten Social Security insolvency by a year, according to the Committee for a Responsible Federal Budget. 

Finsum: Investors should also consider how the  "Trump Accounts" for children could impact clients’ children

The SEC’s Office of the Investor Advocate announced it will examine the increasing use of private equity and other alternatives in retirement accounts as part of its fiscal 2026 objectives. The office has warned that adding private market products to 401(k)s and 403(b)s can pose risks for retail savers, especially in target-date funds and managed accounts. 

Concerns include limited liquidity, incomplete disclosures, and a higher risk of fraud or losses, which the agency will evaluate in relation to fiduciary duties under ERISA. This move follows Senator Elizabeth Warren’s letter to Empower Retirement questioning its plans to offer private equity in its 401(k) products. 

Beyond private equity, the investor advocate’s 2026 agenda will also prioritize improving retail investor disclosures, analyzing China-based VIE structures, collaborating with the SEC’s crypto task force, and using investor research to support rulemaking. 

Finsum: Advisors should aim to ensure retirement plan participants understand the trade-offs of these complex and often opaque investments.

In today’s unpredictable economic landscape, retirees face mounting challenges in preserving their wealth as traditional strategies like the 60/40 portfolio falter under inflation and synchronized market downturns. The financial turmoil of recent years has exposed the shortcomings of conventional diversification, especially during crises like 2022 when both stocks and bonds fell sharply, undermining retirees’ income and security. 

As a result, many advisors now advocate incorporating alternative investments—such as private equity, real estate, and private credit—into retirement portfolios to broaden exposure and potentially enhance returns. Alternatives offer benefits like access to private markets, higher return potential through illiquidity premiums, and diversification through non-correlated strategies. 

Additionally, alternative strategies like managed futures and long/short funds can provide “crisis alpha,” cushioning portfolios during volatile markets. 

Finsum: While these vehicles carry higher fees, tax complexity, and liquidity constraints, their strategic use can help retirees mitigate risk, sustain income, and better navigate an uncertain financial future.