How will a GOP-controlled government impact retirement policy?

Following the resounding election victory of Donald Trump this week and the retaking of the U.S. Senate by the Republican Party, retirement and tax policy could be significantly impacted following the transfer of power, according to the National Association of Plan Advisors (NAPA).

A political majority in the U.S. House of Representatives remains unclear, but should the GOP also capture control there, then the Republican Party will have control over the executive and legislative branches of government, as well as the judicial branch that is likely to persist for decades.

In terms of impacts on retirement policy, NAPA said the most immediate changes stemmed from incoming leadership to powerful Senate committees. Chairs of these committees have latitude to choose the legislative agenda for Congress. Sen. Mike Crapo (R-Idaho) is poised to assume control of the Senate Finance Committee that oversees “the Internal Revenue Code, Social Security, tariff and trade issues, as well as healthcare related tax issues, among others,” NAPA wrote.

The Senate’s Health, Education, Labor and Pensions (HELP) Committee, currently led by Sen. Bernie Sanders (I-Vt.), is likely to be helmed by Sen. Bill Cassidy (R-La.).

“The HELP Committee has primary jurisdiction over private retirement plans and the Pension Benefit Guaranty Corporation through ERISA (the Employee Retirement Income Security Act),” NAPA explained. “But it does share jurisdiction with the Finance Committee, as it relates to tax policy and ERISA issues.”

Crapo has a history of bipartisanship on retirement issues, including his role in passing the SECURE 2.0 legislation alongside Senate Democrats. He also helped pass the Senior Safe Act ”to increase protections for older investors from financial exploitation and abuse,” NAPA said.

Cassidy is also a supporter of “collective investment trusts (CITs) in 403(b) plans, as well as legislation to establish an automatic re-enrollment safe harbor,” NAPA said. Cassidy has also sponsored legislation that would lower the minimum participation age “for ERISA-covered defined contribution (DC) plans from age 21 to age 18.” He opposes environmental, social and governance (ESG) investments.

At the Mortgage Bankers Association (MBA)’s Annual Convention and Expo in Denver last month, MBA executive Bill Killmer described that there would be something of a “tax super bowl” debate in Congress regarding the imminently expiring Tax Cuts and Jobs Act. The TCJA is one of Trump’s signature legislative accomplishments during his first term in office.

The debate on reauthorizing or expanding the law was thought to be particularly fraught if Democrats maintained congressional majorities and held onto the White House, but the likelihood that none of these will happen has risen significantly since Election Day.

“The TCJA made some changes to the retirement tax system, but the roughly $1.5 trillion tax reform legislation delivered major tax relief to corporations, pass-through entities and individual filers, and simplified the system in numerous ways,” NAPA said.

But the upcoming budget debate is still expected to be animated, considering that the majorities in the legislative branch will remain thin and the budget reconciliation process can only go so far.

“During the campaign, President Trump discussed eliminating the taxation of Social Security benefits and the tax on tips, as well as implementing broad-based tariffs in exchange for additional tax cuts. That would presumably be part of this forthcoming budget debate,” NAPA said.