As the S&P 500 continued to set new highs last week, Washington returned to the forefront as Pres. Barack Obama released his fiscal year 2014 budget.

For the first time in four years, the executive branch and both branches of Congress have produced a budget.

With the deficit picture improving this year (the CBO has estimated 2013’s deficit to move below $1 trillion for the first time since 2008), the momentum is there to continue improving the fiscal situation of the United States.

Here is an overview of a portion of the president’s budget.

Entitlements: For Social Security, the president made a gutsy move by proposing a change in the cost-of-living calculations for Social Security, often seen as the third rail of American politics.

That proposal alone is projected to save $130 billion over the next 10 years.

With 46 million Americans receiving Social Security last year, and with the number expected to balloon rapidly higher, a first step toward reforming the program has been made.

On Medicare spending, Obama reduces it by $400 billion over the next 10 years by means testing benefits for wealthier beneficiaries and reducing reimbursement rates.

Expect some of these entitlement reforms offered by Obama to pick up steam, as there appears to be support on both sides of the aisle.

Taxes: Obama’s budget reignited the tax war that culminated in the New Year’s Day fiscal cliff deal.

The tax provisions are numerous, but one item might jump to the forefront for many of our readers.

The budget advocates prohibiting individuals from having more than $3 million in tax-preferred accounts such as IRAs.

Ever since IRAs and 401(k)s were first introduced in the late 1970s, Financial Planning 101 has taught individuals to first maximize your tax-deferred savings, whether through IRAs, 401(k) plans (which often end up in IRAs after retirement) or other similar vehicles.

Disciplined retirement saving strategies have benefited individuals everywhere.

In fact, the Investment Company Institute (ICI) estimates the total balance of U.S. retirement assets to be $19.5 trillion as of Dec. 31, 2012.

What does a disciplined saver need to do to get $3 million in their IRA?

Assume an individual is 25 years old. The individual sets out on a plan to save $10,000 a year into a 401(k) plan every year until age 70.

Maybe he or she can get to that $10,000 through deferrals of $5,000 and an employer match of $5,000.

At the end of that 45-year period, if their investments earn 7 percent per year, the 401(k) will have a balance of $3.28 million at age 70.

If the individual can earn 8 percent a year, the 401(k) will have a balance of $4.52 million at age 70. Both exceed the $3 million threshold.

Consider this provision to be a non-starter in budget negotiations.

Neither the president’s budget nor the House or Senate budgets have any chance of being enacted in their current form, so much of it is grandstanding.

However, with the president taking the initiative to get entitlement reforms on the table, hopes for a grand bargain to solve our long-term fiscal woes are becoming a distinct possibility.

This is good news for investors.

Mark Sorgenfrei Jr. is vice president and investment analyst for Waddell & Associates Inc.