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Key individual tax changes from Trump's 'big beautiful' bill
Current law vs. final legislation
| Current law | Final legislation |
|---|---|
| Standard deduction | |
| $15,000 single; $30,000 married filing jointly for 2025 | $15,750 single; $31,500 married filing jointly for 2025 |
| 'Bonus' deduction for older adults | |
| $1,600 for age 65 and older for 2025; $2,000 unmarried / not surviving spouse for 2025 | $7,600 for age 65 and older; $8,000 for unmarried / not surviving spouse; both from 2025 through 2028 |
| State and local tax deduction (SALT) | |
| $10,000 limit through 2025 | $40,000 limit for 2025; increases by 1% through 2029; reverts to $10,000 in 2030 |
| Child tax credit | |
| Max credit of $2,000 per child through 2025; refundable portion $1,700 for 2025 | Max credit of $2,200 per child; refundable portion $1,700 for 2025 |
| Estate and gift tax exemption | |
| $13.99 million single; $27.98 million married filing jointly for 2025 | $15 million single; $30 million married filing jointly for 2026 |
| Tax on tips | |
| N/A | Deduct up to $25,000 per year from 2025 though 2028 |
| Overtime pay | |
| N/A | Deduct up to $12,500 per taxpayer from 2025 through 2028 |
| Auto loan interest | |
| N/A | Deduct up to $12,500 per taxpayer from 2025 through 2028 |
| Auto loan interest | |
| N/A | Deduct up to $10,000 of annual interest on new loans from 2025 through 2028 |
| Trump Accounts for child savings | |
| N/A | One-time $1,000 credit to account per child born between 2025 through 2028 |
| Charitable deduction for non-itemizers | |
| N/A after 2021 | $1,000 single; $2,000 married filing jointly; permanent after 2025 |
Source: CNBC
Choosing an IRA rollover means that your money remains tax-advantaged and capable of growth, as in a USAA-sponsored plan. You may also gain more investment options than what may have been available in your USAA-sponsored plan. You may also gain oversight of managing these important retirement assets from your trusted Advisor.
If you roll your retirement plan assets over into an IRA account that you already own through your Advisor, you also receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.
| 'Receive the benefit of combined statements and holistic investment planning, making it easier to track your overall financial situation.' |
|
Some of the benefits of rolling your money into an IRA include:
Tax-deferred growth potential: This generally avoids current income tax and distribution penalties when removed from a USAA-sponsored retirement plan.
More investment choices: This allows for additional contributions, if eligible. IRAs can be combined and handled by one provider, thereby reducing trustee costs and consolidating statements. Protection from creditors in federal bankruptcy proceedings. The combined amount of your required minimum distributions (RMDs) can be taken from any of your Traditional, SEP or SIMPLE IRAs.
However, there are also some important considerations that USAA should make before rolling over their money into an IRA, these include:
- Internal management fees might be higher than in a USAA-sponsored retirement plan.
- Fees and expenses depend largely on the investments you choose.
- Loans from an IRA are not allowed.
- Early distributions may be subject to a 10% IRS tax penalty in addition to income tax.
- RMDs begin April 1 following the year you reach 70½ and annually thereafter; leaving the money in the former Fortune-500 plan may allow RMDs to be delayed until separation from service.
- IRAs are subject to state laws governing malpractice, divorce, creditors (outside of bankruptcy), and other lawsuits; leaving the money in the former USAA-plan may provide additional protection against creditors.
- Net unrealized appreciation (NUA) is the difference between what you paid for employer securities and their increased value. You lose favorable tax treatment of NUA if the funds are rolled into an IRA.
Hopefully, these insights will be helpful as you plan your retirement from USAA.
For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/will-your-retirement-plan-retire-with-you-e-brochure-offer
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What types of retirement savings plans does USAA offer?
USAA offers a 401(k) plan as part of its retirement savings options for employees.
How does USAA match employee contributions to the 401(k) plan?
USAA matches employee contributions up to a certain percentage, typically a dollar-for-dollar match up to a specified limit.
Can employees at USAA choose their investment options within the 401(k) plan?
Yes, USAA allows employees to choose from a variety of investment options within the 401(k) plan to suit their individual retirement goals.
What is the vesting schedule for USAA's 401(k) matching contributions?
USAA has a vesting schedule that determines how long an employee must work at the company to fully own the matching contributions made by USAA.
How can USAA employees access their 401(k) account information?
USAA employees can access their 401(k) account information through the USAA employee portal or by contacting the HR department.
Does USAA offer any educational resources for employees regarding their 401(k) plans?
Yes, USAA provides educational resources and workshops to help employees understand their 401(k) plans and make informed investment decisions.
What is the minimum contribution percentage required for USAA employees to participate in the 401(k) plan?
USAA typically requires employees to contribute a minimum percentage of their salary to participate in the 401(k) plan, which may vary by plan specifics.
Are there any fees associated with USAA's 401(k) plan?
Yes, USAA’s 401(k) plan may have administrative fees, which are disclosed in the plan documents provided to employees.
Can USAA employees take loans against their 401(k) savings?
Yes, USAA allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.
What happens to a USAA employee's 401(k) if they leave the company?
If a USAA employee leaves the company, they have several options for their 401(k), including rolling it over to an IRA or a new employer's plan, or cashing it out.
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