Insights

Economic theory suggests that a country’s optimal tariff or trade restriction is zero regardless of other countries’ trade policies. Despite well-reasoned economic theory, trade tariffs are frequently not zero, and trade wars do happen largely due to political considerations. There is a compel-ling argument that if the U.S. can shrink its trade deficit, we could boost economic growth meaningfully above the 2% trend line rate. Our current annualized net trade deficit is roughly $600 billion, which is 3% of our $21 trillion economy. China is by far the most significant contributor toward our trade deficit. The U.S. has a negative trade balance of $420 billion with China. The U.S. imports $540 billion worth of goods and services, and exports only $120 billion to China. The Trump administration would like to oblige the Chinese to buy more products from us, which would boost our exports to China, thus reducing the negative economic drag of such a large trade deficit. The actual trade deficit element of the dispute can be solved relatively easily.

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There are no tax consequences when you take money out of a Roth 401(k) when you’re 59½ and you have met the five-year rule. If you need $20,000, take out the $20,000, and no taxes are due. If you take a similar distribution from a traditional 401(k) plan, the money you withdraw is subject to ordinary income tax.

Then there are the required minimum distributions. When you turn 70½, whether you need the money or not, you are required to take an RMD from a traditional 401(k). But with a Roth, you don’t have to take distributions. This makes a Roth 401(k) a great estate-planning tool.y.