Will Trump’s Tweet Tweak Tax Reform Focus?

A day after President Trump tweeted his support for the 401(k), the Chairman of the House Ways and Means Committee said House Republicans are “taking a fresh look” at savings plans.

Politico Pro reports that Chairman Kevin Brady, when asked about President Donald Trump’s tweet that there would be no changes to 401(k) plans, replied: “We are taking a fresh look at the savings plans, at the savings vehicles,” adding that there may be “fewer of them” in the Republican tax reform bill, according to the report. Brady said that a universal savings account would be a part of the reform plan that Republicans will release after passing a budget, and that “We think the ability to retain tax-free savings is critical.”

He went on to say that there would be more incentives for more families to start saving earlier than they can under the current tax code, according to the report.

Rumors that Republicans were considering limits on pre-tax contributions in 401(k) plans have been circulating for weeks, but came to something of a head last week along with rumors that 401(k) pre-tax savings would be limited to $2,400, with the rest considered Roth contributions.

On Sunday, attendees at the ASPPA Annual Conference got a preview of data from the non-partisan Employee Benefit Research Institute using their Retirement Security Projection Model® (based on information from millions of administrative records from 401(k) recordkeepers), that found that more than half of current 401(k) contributors would be impacted by a $2,400 contribution Roth. Even at the lowest wage levels ($10,000 to $25,000), nearly 4-in-10 (38%) of the 401(k) contributors would be impacted by the $2,400 threshold.

And then, early Monday, President Trump had tweeted: “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!”

Politico Pro noted that the House appears likely to pass the Senate budget on Thursday and tax reform legislation text will likely come soon after that.

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One Comment

  1. Dallas Salisbury
    Posted October 24, 2017 at 11:37 am | Permalink

    Mr. Adams, You do outstanding work – and have since I began reading your work in Plan Sponsor magazine some decades ago. President Trump has proven to be a “master” at diversion, only to divert again at a later point in time with another 180 degree turn. An article in a morning paper ended today with advice on how to get what you want from Trump: 1. tell him how much credit he will get for the policy and 2. be that last one to talk to him about the topic before he “speaks” again. History of the Fiduciary reg and the last administration might be worth thinking about in the current tax process. I recall a meeting in the Spring of 2015 at which a senior finance executive stated that he had just been at the White House and his group had been assured the final reg would not happen. Then came a final reg. At a conference in NY in the fall of 2016 a trade association executive authoritatively stated that if Trump was elected they were assured by transition planners that the Fiduciary reg would be delayed quickly and then die at an early age, if Congress did not one or both of these things well in advance of inauguration in January. How many things in DC come to pass after having been assured “it will not happen, we stopped it”, because the idea was not dead, even if in a coma on life support prior to reawakening with great strength and new momentum? On the farm we were always warned not to count our chickens before they have hatched. Tax reform is still an incubating egg, if you will. Plenty of time left for new tweets!

    Thank you for your many years of humor and insight!

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