The Trump administration is preparing to announce a plan at the Davos Economic Forum next week that would allow Americans to use retirement savings in 401(k) plans to make down payments on home purchases.
National Economic Council Director Kevin Hassett spoke with Fox Business’ Maria Bartiromo about the plan during an interview on Friday morning.
"We've got a whole bunch of policies that are going to help people [become homeowners]," Hassett said. “The one you didn't mention that we're also talking about, and the president will put the final plan out in Davos next week, I'll be flying up there with him, is that we're going to allow people to take money out of their 401(k)s and use that for a down payment."
Hassett said that the mechanics of deploying assets from a 401(k) for a home purchase are “still being worked out.”
Responding to a question from Bartiromo about the potential for such a policy to weaken Americans’ retirement readiness, he floated the idea of exchanging 401(k) assets used for a down payment for a part of the home’s equity.
“Suppose that you put 10% down on a home, and then you take 10% of the equity of the home and put it in as an asset in your 401(k),” Hassett said. “Then your 401(k) will grow over time.”
Americans already have several pathways for tapping retirement assets to support home purchases, each with its own benefits and drawbacks. First-time homebuyers, for example, can withdraw up to $10,000 for a down payment without incurring the 10% penalty — although they’ll still pay income taxes on the withdrawal. Those with 401(k) accounts can't make such withdrawals, but they can draw a loan from their account, generally up to the lesser of $50,000 or 50% of their total account balance.
Experts say the best practice is to consider home purchases and early withdrawals as part of a broader financial plan.
During the interview, Hassett also detailed related policy proposals discussed publicly by President Donald Trump in recent days, including his direction Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities to help drive down borrowing costs, as well as his order to bar large institutional investors from acquiring single-family homes.
"The typical monthly payment about doubled for an ordinary family buying an ordinary home," Hassett said. "And the down payment they needed to buy a home went from about $15,000 to about $32,000. And so there's a real lot of room to make up."
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