While President-elect Biden and a nation wait for President Trump to concede the election, focus turns to how a Biden administration will lead. Biden has put forth many policy initiatives, including significant changes to retirement savings and Social Security.

His ability to implement his vision depends in large part on Georgia. Two Senate races are headed to run-off elections in January. It seems likely that at least one race will go to a Republican, giving the GOP a razor-thin majority in the upper chamber. If that happens, Biden will need to negotiate with Senate Republicans to get anything passed.

Even in a divided government, however, there are potential far-reaching changes to retirement savings on the horizon. Here are five significant ways a Biden administration could make lasting changes to your retirement.

Tax Benefits of Retirement Savings

Under current law, contributions to a defined contribution plan such as a 401(k) reduce an individual’s taxable income. The tax savings of this reduction depend on the individual’s marginal tax bracket.

A taxpayer in the highest current bracket, for example, would see their federal tax bill reduced by 37% of the amount of their retirement contribution. In contrast, a taxpayer in the lowest bracket would see just a 10% reduction. This is not unique to retirement savings. Any reduction in taxable income will generate a larger tax savings for those in the higher brackets. It’s a function of a progressive tax system.

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