- Ways and Means Committee Chair Rep. Kevin Brady told CNBC that his committee is now considering increasing the cap on 401(k) contributions to $US20,000 annually.
- That represents a reverse from earlier reports that Republicans were thinking of lowering the cap to $US2,400 a year.
- Trump resisted the lower cap, and Brady told CNBC the discussed the issue with the president.
In a reversal, Republicans appear to be set on proposing an increase in the amount Americans can add to their 401(k) retirement accounts each year, rather than capping the limit.
Rep. Kevin Brady, the chair of the House Ways and Means Committee, told CNBC that his committee is considering increasing the limit on annual caps on contributions to traditional, tax-deferred accounts to $US20,000 a year from the current $US18,000. The cap is set to increase to $US18,500 in 2018.
That represents a reversal from reports that Republican leaders were considering including a $US2,400 a year cap on traditional retirement savings accounts in forthcoming tax legislation. After that point, savers would be forced to add money to Roth-style plans, which are taxed up front.
Such a proposal would have helped raise more tax revenue to help offset some of the tax cuts in the GOP plan.
But Trump vehemently resisted this change, tweeting Monday that there would be “NO change to your 401(k).” Then on Wednesday, he suggested the idea was up for negotiation.
Here’s a full rundown of the 401(k) drama:
- Friday, October 20: Reports surfaced that the GOP was considering including an annual $US2,400 cap for traditional tax-deferred 401(k)s and IRAs. The current contribution cap for a 401(k) is $US18,000 a year for people under the age of 50. Rumours of this proposal garnered criticism that it could depress average Americans’ propensity to save for retirement.
- Monday: Trump tweeted that “there will be NO change to your 401(k),” seemingly nipping the idea in the bud.
- Wednesday morning: Rep. Kevin Brady said changes to retirement-savings accounts were still on the table in the tax-reform bill.
- Wednesday afternoon: Trump told reporters that there would be no changes to retirement savings in the bill or possible proposed changes that could be used for “negotiating.”
- Friday: Brady told CNBC the annual cap may actually be increased to $US20,000 a year from the current $US18,000 a year.
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