Retirement savings and consumer advocates are applauding President Donald Trump’s Monday tweet promising “NO change” to 401(k)s as tax reform kicks into high gear.
Trump’s tweet comes as news swirls that Republican lawmakers are mulling a cap on 401(k) contributions at $2,400 per year.
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 Save Our Savings Coalition — which includes AARP, the American Retirement Association, American Benefits Council and American Council of Life Insurers — said Monday that Trump’s tweet “made clear just how much retirement savings matter to families across the country.”
Meaningful retirement incentives “help millions of hardworking, middle-class families plan for their future and any effort to reform the tax code must protect these families and the retirement planning they’ve depended upon for generations,” the Coalition said.
Both the Senate and House have approved budgets, paving the way for tax reform.
While the Coalition said that it was “thrilled” to see the president’s statement via tweet, the groups will “continue to work to ensure lawmakers do right by the middle class by preserving and expanding our retirement system as tax reform moves through Congress.”
Indeed, Greg Valliere, chief global strategist for Horizon Investments, said in his Monday commentary that passing the budgets “was easy.” Now comes “the hard part — the Ways and Means Committee has to write a tax bill in the next couple of weeks, and the details will prompt an uproar from lobbyists,” he said, citing the battle “starting already” over 401(k) accounts.
What else looms? “The likelihood of a titanic budget fight when a continuing spending resolution expires on Dec. 8,” Valliere said.
He opines that a budget resolution between the House and Senate will be completed “later this week,” with no need for a conference to iron things out.
Then House Ways and Means Chairman Kevin Brady “will unveil a 1,000-page tax bill — finally — in the week of Oct. 30, with markup in his panel by early November and a bill on the House floor before Thanksgiving,” Valliere continues.
“This is when things get dicey,” Valliere writes, citing a tax lobbyist friend.
Senate Finance Committee Chairman Orrin Hatch likely won’t have his tax reform bill out “until late November,” Valliere said, “and there undoubtedly will be major differences with the House on issues ranging from 401(k) reform to the state and local tax break; the former is probably safe but the latter tax break could get curbed for very wealthy taxpayers.”
The upcoming complications associated with government funding expiring on Dec. 8 and the Senate completing its version of a tax bill around the same time “barely give[s] enough time for a conference committee to iron out a tax compromise by Christmas,” Valliere said.
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