On Monday, President Trump assured that the tax benefits for 401(k) plans would remain intact under the proposed tax reform of his administration, despite conflicting reports.
“There will be NO change to your 401(k). This is an excellent and widely used middle-class tax break, and it will remain!” he tweeted on Monday morning.
Recent reports indicated that Republicans were considering significant cuts to the tax-free contributions allowed for these popular retirement accounts. Discussions regarding the 401(k) deduction have been ongoing among tax reform advocates for several months.
In order to counteract the increase in deficits resulting from tax reductions, certain favored tax deductions may need to be removed. For instance, the deduction for state and local taxes is currently under review.
Related: The contribution limit for 401(k) plans will increase to $18,500 next year
Notwithstanding Trump’s tweet on Monday, there have been various occasions where his commitments have not translated into actual legislation.
He has consistently promised not to cut Medicaid, but subsequently advocated for a replacement for Obamacare that would significantly reduce funding for Medicaid. He has also stated that his tax plan would favor middle-income taxpayers rather than the affluent, despite independent analyses indicating that it is primarily the wealthy who would benefit.
