Republican tax plan could affect 401(k)s, despite Trump assurances
House Ways and Means chair said Republicans are "exploring a number of ideas."
— -- Republican tax writers on Capitol Hill are still considering changes to 401(k) retirement savings programs, downplaying President Donald Trump's repeated pledges not to touch retirement accounts popular with middle-class Americans in the GOP tax overhaul.
At a breakfast with reporters this morning, House Ways and Means Committee Chairman Kevin Brady, R-Texas, said tweaks to the current system are possible in the tax plan, which Republicans are expected to release on as early as Nov. 1.
“We want more Americans to save more. We want them to save earlier in their lives,” Brady said, adding that congressional Republicans are “exploring a number of ideas” and share the same goal as Trump.
“We are continuing discussions with the president, all focused on saving more and saving sooner,” he said.
On Monday, Trump tweeted, “There will be NO change to your 401 (k),” amid reports that Republicans writing the sweeping tax bill are considering reduced contribution limits for 401(k)s.
He reaffirmed his position Wednesday, telling reporters that leaving the retirement savings plans intact is “very important.”
“I didn’t want that to go too far. That’s why I ended it very quickly,” he said of the 401(k) discussions.
Brady declined to comment on Trump's response to his comments, other than to point out that Trump called him "fantastic."
The emerging conflict between the White House and congressional Republicans over retirement savings highlights the challenges Republicans will face when they release their full proposal to overhaul the U.S. tax system. Republicans are already steeling themselves for lobbying from interest groups opposed to changing existing tax law, and some are concerned that additional criticisms from the president could complicate their effort.
"I don’t think the president knows exactly what we’re contemplating and how that would enhance savings in our country," Rep. Carlos Curbelo, R-Fla., another member of the House Ways and Means Committee, told reporters. "I think when he said more changes he probably meant that he didn’t want Americans to be worse off from any changes."
Rep. Dave Schweikert, R-Ariz., another member of the panel, said the ongoing discussions about changes to retirement plans are more complicated than Trump suggested.
"The president said something on this, but there's three- to four-dozen moving parts that are in this conversation," he said, inviting the White House to contribute to the policy debate.
A move to lower contribution caps to the plans, which are not taxed until money is withdrawn from them, could force more Americans to contribute to their retirement by putting money into plans that are taxed immediately. The policy change would help pay for some of the tax cuts in the Republican plan -- which is crucial to moving the bill through Congress.
The House will vote Thursday on a budget resolution setting the parameters for the tax bill and clearing a procedural hurdle that will allow them to take up the legislation and pass it with a simple majority in the Senate.
Despite ongoing disagreements within the party over changes to state and local tax deductions, Republicans hope to pass the bill through the House by Thanksgiving and get it to Trump’s desk by the end of the year.