Your 401(k) Contributions May Not Be Safe After All

House tax-writing chief Kevin Brady suggests limits are in play, despite Trump's opposition
By John Johnson,  Newser Staff
Posted Oct 25, 2017 12:03 PM CDT
Your 401(k) Contributions May Not Be Safe After All
House Ways and Means Committee Chairman Rep. Kevin Brady, R-Texas.   (AP Photo/Susan Walsh)

President Trump declared emphatically this week that 401(k) contributions were off-limits to congressional negotiators working on changes to the tax code. But on Wednesday, one of those negotiators—in fact, one of the most influential ones—suggested otherwise, reports the Washington Post. Kevin Brady, who chairs the House tax-writing committee, indicated lawmakers were indeed considering changes to the rules surrounding the popular retirement accounts. Likewise, the Senate's chief tax writer, Orrin Hatch, said that he doesn't "have any problem looking at everything." Much is in flux, and more will be known when Brady and his House colleagues reveal their broad proposals next week, but the upshot seems to be that future 401(k) contributions may not be as safe as Trump suggested.

Brady couched his comments on 401(k)s in the context of trying to come up with a better alternative for people. Too few people use them, he said, and those who do save too little. "We think we can do better," he said, adding that "we are continuing discussions with the president, all focused on saving more and saving sooner." Brady didn't offer specifics, but the Wall Street Journal floats a possibility: The forthcoming plan "might pinch pretax savings for high-income households and use the money to beef up an underused tax break known as the saver's credit." Under this credit, the government matches up to 50% of people's contributions, though the program is limited to incomes below $31,000 for individuals and $62,000 for couples. (More 401k stories.)

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