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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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