House GOP bows to Trump’s demands for now, propose no changes to 401(k)s or retirement savings in tax bill

President Donald Trump and Rep. Kevin Brady

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President Donald Trump and Rep. Kevin Brady
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Jonathan Ernst/Reuters

    For weeks, Republicans mulled including some changes to 401(k)s and retirement savings accounts in their massive tax reform bill. President Donald Trump promised there would be no changes to 401(k)s in a tweet last week. The House GOP bill released on Thursday does not include any caps or changes to 401(k)s.

After almost two weeks of going back and forth, House Republican leaders aren’t touching your retirement savings – for now.

The newly released House GOP tax reform bill, Tax Cuts and Jobs Act (TCJA), does not propose major changes to 401(k) contributions despite weeks of leaders mulling over the prospect.

On October 20, reports surfaced that GOP tax writers were considering a cap of $2,400 on the annual amount people could put in a traditional, tax-deferred 401(k) or IRA account. After that, any additional savings would have to go in a Roth-style account that taxes contributions up front. That would have helped to offset some of the tax revenue that analyses forecast would be lost after tax cuts.

That prompted concern from the asset management industry and others, who worried it would depress the amount Americans would contribute to retirement savings.

After the uproar, President Donald Trump tweeted on October 23 that there would be “NO changes to your 401(k),” seemingly killing the idea.

But Rep. Kevin Brady, the head of the House Ways and Means committee and author of the bill, suggested some changes could still come – and Trump said the issue could be used for “negotiating.”

But the actual legislation includes no proposed cap on retirement savings or traditional 401(k)s. House Speaker Paul Ryan told CNN on Thursday that Trump’s thumb on the scale was not an issue.

“He’s always throwing ideas on the pile,” Ryan said of Trump’s input. “There’s nothing wrong with that. There’s nothing wrong with putting out ideas. We do it privately and sometimes he does it publicly.”