New 401(k) Rules, Bonus Depreciation’s Return & Rate Cuts: What Investors Need to Know

In this month’s update, we’re addressing some of the new important changes shaping wealth strategies today: the new 401(k) rules, the return of bonus depreciation, and a shifting interest rate environment.

These shifts may create an opportunity for savvy investors or high-income professionals to align retirement savings and taxable investments in smarter, more tax-efficient ways.

First up, what’s changing in 401(k)s?

The new White House Executive Order signed this summer is designed to increase retirement savings, improve access, and expand investment options. Crypto, Real Estate and other new asset classes will be fair game. The overall effect on the investment market will likely be an increase in flows into retirement assets and alternative investments, along with heightened competition among financial institutions.

That said – These 401(k) changes don’t just expand menus — they will increase competition among sponsors (both large and small), which we hope will ultimately benefit the investor. This includes:

• New investment vehicles
• Lower plan fees or compressed margins over time due to competition
• Access to institutional-quality alternatives at smaller minimums
• Better alignment of retirement dollars with broader wealth strategies
• More investor friendly offerings, more transparency to attract capital
• More regulatory scrutiny of offerings

Caution: All good things have a downside – and with the new Executive Order, investors need to be wary and thoughtful. Access to new investment options is exciting, but they are not for everyone, and investors will also need to do more due diligence on their own to protect their money.

What About Bonus Depreciation?

Bonus depreciation, one of the most powerful tax tools for real estate investors, is back because of the passage of the One Big Beautiful Bill Act (OBBBA) in July. The new law permanently restores 100% bonus depreciation for qualifying assets and increases the deduction limits.

The OBBBA restores 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, making it a permanent part of the tax code. This brings investors the opportunity for 60–80% write-offs and accelerated deductions in the first year through cost segregation studies.

In addition, with stricter regulations and reporting requirements – Opportunity Zones are also back and now permanent.

Why Interest Rates Matter

The Federal Reserve has begun cutting rates again, and more easing is expected through the end of year, and then deep into 2026. This marks a long-awaited shift in the financial markets, and for real estate. We are bullish – New York and our market have been suppressed by rates for a few years, and we expect significant growth for the next 18–30 months. Rates could mark the first push for a slow sales market, and a new sales rush due to the low inventory, and pent-up demand from the last few years of high rates. Rate cuts will make entry prices attractive again, with the potential for rising prices 5-15% as rates fall into the second half of 2026.

• Cheaper Financing: Lower borrowing costs will fuel acquisitions and refinances.
• Cap Rate Compression: Properties may revalue higher as investors chase yield.
• More Deals: Transaction volume should rebound after three years of slow growth.

The Takeaway

Between new 401(k) flexibility, the return of bonus depreciation, and falling interest rates, investors have an investing window to align their retirement and taxable investments for both growth and tax efficiency. As always, and especially these new rules – please review any offering with your accountant, attorney or financial advisor before investing.