Potential changes to 401(k) accounts appeared to get new life on Wednesday, with a key GOP chairman declining to rule out their inclusion in tax legislation and President Trump leaving room for negotiation.
Trump on Monday seemed to take a hard line against changing the rules for retirement plans, tweeting that “there will be NO change to your 401(k).”
But on Wednesday morning, House Ways and Means Committee Chairman Kevin Brady (R-Texas) — the lead drafter of the tax-reform bill — didn’t give a definitive answer when asked whether changes to 401(k)s were still being considered.
He said lawmakers are exploring ways to further encourage retirement savings.
“We think in tax reform, you can create incentives for Americans to save more and save sooner, which can help them,” he said at a breakfast hosted by the Christian Science Monitor.
Meanwhile, Trump appeared to soften his position, saying that 401(k) changes are still on the table “and maybe we’ll use it as negotiating.”
The president stressed that he values 401(k)s.
“401(k)s, to me, are very important,” he said. “And they’re important because that’s one of the great benefits to the middle class.”
Financial industry stakeholders last week said they were hearing that Republicans were considering significantly limiting the amount that people could put into 401(k) plans on a pretax basis.
The current annual cap for most people is $18,000, but lobbyists had heard that the limit could be reduced to $2,400. Amounts over the $2,400 cap could be put into “Roth” accounts where the money is taxed when it’s deposited but not when it’s taken out.
A change in the cap on pretax 401(k) contributions could provide an offset to help pay for reducing tax rates. But the financial industry warns the policy change could reduce the amount that people save for retirement.
Democrats have blasted Republicans for potentially considering lowering the cap. And not all Republicans have signaled that they would be on board with such a change.
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NEW: Trump refuses to commit to not changing 401(k) plans https://t.co/BrLnyR587E pic.twitter.com/KGOaw0ZeKP
— The Hill (@thehill) October 25, 2017
I hope no one took Trump literally when he promised no changes to the 40lKs. He is prone to hyperbole. It is just Trump being Trump;)
He lies and his worshipers don’t notice. Or they make excuses for him.
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