Trump Says ‘NO Change To Your 401(k)’ In GOP Tax Plan

donald trump 401k
WASHINGTON, D.C. - OCTOBER 19: (AFP-OUT) President Donald Trump speaks to the media during a meeting with Governor Ricardo Rossello of Puerto Rico in the Oval Office at the White House on October 19, 2017 in Washington, D.C. Trump and Rossello spoke about the continuing recovery efforts following Hurricane Maria. (Photo by Kevin Dietsch-Pool/Getty Images)

Following reports that the Republican tax plan could dramatically reduce the amount of pretax money Americans are allowed to contribute to their 401(k) plans, President Donald Trump tweeted Monday morning that there will be “NO change to your 401(k)”:

This is great news for American workers, as some reports said the tax plan could lower the annual cap for pretax contributions from the current $18,000 for those under 50 to as low as $2,400. Amounts over $2,400 could then be placed in a “Roth” Individual Retirement Arrangement, which don’t tax earnings when they’re withdrawn later on.

However, when Senate Majority Leader Mitch McConnell was asked Sunday whether the Senate would ever consider limiting 401(k) tax benefits, McConnell wouldn’t rule it out. “We’re just beginning the process of actually crafting the bills,” McConnell said, adding that “it’s way too early to predict the various details.”

Lowering the cap for pretax contributions would be an easy way for the GOP to offset the numerous tax cuts the Trump Administration is pursuing. However, it would be an extremely unpopular fix: According to the Investment Company Institute, some 55 million Americans participate in 401(k) plans, holding about $5 trillion in assets.

The 401(k) is by far the most popular, easiest, and most effective way for Americans to save for retirement. It would be a huge misstep for either the Trump Administration or Congress to target those plans. Giving the middle class more tax breaks wouldn’t add up to much in the long-term if the cap to 401(k) tax deferment is so dramatically slashed.

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By Ann

Ann is a conservative political blogger whose work has appeared on Bleacher Report and America Liberty PAC. Nothing angers... More about Ann

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