President Donald Trump speaks during a meeting with UN Secretary General Antonio Guterres in the Oval Office of the White House, Friday, Oct. 20, 2017, in Washington. (AP Photo/Evan Vucci)
President Trump said Monday he won’t allow Congress to reduce tax-exempt contributions to popular 401(k) savings plans, amid reports that lawmakers are considering such a move.“There will be NO change to your 401(k),” Mr. Trumptweeted. “This has always been a great and popular middle class tax break that works, and it stays!”
As Congress prepares to address Mr. Trump’s tax-cut proposal, some congressional staffers say lawmakers are looking at proposals that would allow 401(k) participants to contribute far less than what is currently allowed in a traditional tax-deferred plan. It hasn’t been clear whether Congress also is considering lower limits on Individual Retirement Accounts (IRAs).
Lowering the tax-exempt contribution limits would provide more revenue to the government, while the tax cuts are expected to add about $1.5 trillion in deficits over the next decade.
Currently, workers under 50 can contribute up to $18,000 per year in tax-deferred savings to a 401(k) plan; employees age 50 or older can contribute up to another $6,000 annually in catch-up savings. The current limit for IRAs is $5,500, with an additional $1,000 contribution allowed for savers 50 and older.
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