On May 28, 2021 President Biden released his first budget proposal under his presidency. The $6 trillion plan includes two proposals: American Jobs Plan, which addresses infrastructure, and the American Families Plan, which covers child care, paid family and medical leave.
As far as retirement plans including self-directed IRAs and the self-directed solo 401k plans, the budget proposal does not include any changes at this time. This is welcomed news considering Biden had campaigned to impose a financial transaction tax on equity investments made under retirement accounts which includes IRAs and 401k plans.
On another note, the self-directed solo 401k may become more popular considering the budge proposal calls to increase the corporate tax rate to 28% from 21%. Since the solo 401k plan allows for pretax contributions, this may be a good way to reduce paying higher corporate taxes.
Further, the budget proposal also seeks to increase the top marginal individual tax rate to 39.6%. Therefore, sole proprietor businesses may also benefit from setting up a solo 401k plan and making pretax contributions to reduce their taxable earned income.
