President Trump vowed on Monday that his tax cut plan would not include any changes to tax-deferred retirement accounts such as 401(k)s, following reports last week that House Republicans were weighing a sharp reduction in the amount of income American workers could save through such programs.
Trump tweeted Monday morning: “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!”
Such tax-deferred accounts are a popular way that many Americans, especially middle-class workers, save for their retirement. Any proposed limits or restrictions could have drawn a sharp backlash, including in the asset management industry.
Americans are allowed to contribute up to $18,000 per year pretax in a 401(k) or similar account, benefits that remain extremely popular. In 2015, 54 million Americans had active 401(k) accounts, according to the Investment Company Institute. Some lobbyists had fretted that the White House would severely lower the cap on the amount of money that Americans can contribute pretax to these accounts, but Trump’s message on Monday seemed designed to quash that concern. Still, the White House has said it would pursue looking at ways to simplify the tax treatment of retirement accounts, leaving open the possibility that there could be changes in this area. It also leaves open the possibility that Trump will further scale back the plan in the face of resistance on popular tax breaks.
Trump's tweet comes as the White House steps up its campaign for tax legislation this week. The president wrote an op-ed in USA Today under the headline, “With tax reform we can make it morning in America again,” a play on former president Ronald Reagan's campaign slogan.
Trump spoke with House Republicans on a Sunday evening conference call to mobilize support for tax cuts, and he plans to visit Capitol Hill on Tuesday for a luncheon meeting with Senate Republicans.
Meanwhile, Ivanka Trump, one of the president's daughters and a senior White House adviser, will travel to suburban Philadelphia on Monday to hold a town hall meeting about tax reform.