The President Says on Twitter That the 401(k) Plans Will Be Untouched, But Not Everyone Is Convinced
The Trump tax plan continues to face controversy, this time with concerns that the 401(k) pension-matching plan may face reductions in the new tax overhaul plan, even as the president comes out on Twitter to claim that the plan will not be touched by the tax reforms.
There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!
— Donald J. Trump (@realDonaldTrump) October 23, 2017
The concerns about 401(k) cuts came as a result of a report from The Wall Street Journal, which claimed that proposals for 401(k) caps were being bandied about during the tax plan negotiations. The caps would dramatically reduce how much Americans may contribute before taxes to their 401(k) plans to as a little as $2,400 per year. The cuts would also cap individual retirement account contributions. The moves would be made in an effort to cut costs as the Republicans seek to compensate for the planned tax cuts.
The New York Times also reported that the tax reform could include a $2,400 cap on 401(k) plans.
At the moment, the full tax reform bill has yet to be released, with only a framework available to the public as Congress discusses the particulars of the bill.
The framework states that the plan will aim to “maintain or raise retirement plan participation of workers and the resources available for retirement.”
With Americans working longer and retiring later in life, coupled with stagnant wages and rising costs of living across the U.S., a cap to the 401(k) plan could imperil many Americans’ retirement plans and make saving for the future more difficult for those newly entering the workforce.
The issue is that the budget deficit will be aggravated by the massive tax cuts. Alongside Republican demands for increased spending on things like the border wall, the budget deficit will only likely balloon without significant revenue generation in other areas.
“Time to worry? Trump promises ‘no change’ for 401(k) plans in tax overhaul,” MarketWatch, October 23, 2017.