GOP leaders are trying to ease panicked Americans who are socking away thousands of dollars annually for retirement, after lawmakers floated the idea of drastically reducing the pre-tax limit on contributions to $2,400 as part of the forthcoming tax plan.
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“I think 401(k)s are very important,” said House Majority Leader Kevin McCarthy, R-Calif., during an interview on Fox’s “Sunday Morning Futures”. “The way we’ll look at the 401(k), we will protect it, we’ll expand the amount that you can invest, but we’ll also give you an option to actually not be taxed later in life, not to have that tax burden hovering over you in the future, but actually have greater income in the future.”
Currently, people under age 50 are able to save up to $18,000 per year in pre-tax savings in their 401(k), while those over 50 can save up to $24,000. After reports surfaced that 401(k) those contributions could be curbed as part of the tax plan, President Donald Trump set the record straight.
“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!” he tweeted on Monday. He reiterated this view while talking to the press on Wednesday.
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
McCarthy’s comments on Sunday follow fellow lawmaker Kevin Brady, R-Texas, chair of the House Ways and Means Committee, who last week dialed back on reports that contributions could be cut as part of the tax plan.
On Friday, Brady said he and fellow lawmakers are now looking into possibly raising contribution limits to $20,000 or higher.