Americans are celebrating Trump’s victory in raising the benefits for Social Security recipients. This, after years of stagnation under President Obama.
The increase in benefits is a part of Trump’s fulfillment of his campaign promises. He made it clear that he was going to cut taxes, but not hurt millions of Americans’ Social Security.
Now Trump and conservatives in Washington are pushing for real tax reform. But the liberals are pushing back. Rumors have started to swirl that in order to achieve the promised cuts, a major program would be receiving a huge hit. It would mean that millions of working Americans would have less money when they reach retirement age.
But never fear, Trump has just set the record straight.
President Trump tweeted this morning that Americans would not face any changes to their 401(k) retirement plans under the GOP’s proposed tax plan: “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!”
What he’s referring to: Trump is responding to a New York Times story from Friday, which stated that Republicans were considering a yearly cap as low as $2,400 for contributions to 401(k)s — a sharp cut from the current $18,000 for workers under 50 and $24,000 for workers over 50.
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
According to the New York Times article, lobbyist claimed Republican lawmakers were considering capping the 401(k) contributes by such a sharp amount.
The proposals under discussion would potentially cap the annual amount workers can set aside to as low as $2,400 for 401(k) accounts, several lobbyists and consultants said on Friday. Workers may currently put up to $18,000 a year in 401(k) accounts without paying taxes upfront on that money; that figure rises to $24,000 for workers over 50. When workers retire and begin to draw income from those accounts, they pay taxes on the benefits. (Source: New York Times)
Not a huge surprise if the Times got this wrong. They are hardly a source of honest and accurate news these days. Considering their largely liberal bias, it’s very likely they pushed this story based solely on conjecture and rumors. All to slam Trump and his tax reform.
A cut to 401(k) would mean you would not be able to put aside as much money per paycheck. That means far less money to draw from when you reach retirement age.
Generally speaking, cash put into a retirement plan is pre-taxed. Capping 401(k) means more taxable money for the government to gobble up. In reality, that would be the opposite of what Trump has been promising.
It looks like, though, that the President is promising that 401(k) would not be hurt. As a business and employer of many, I’m not surprised he understands how much capping 401(k) would hurt working Americans.
With 401(k) intact, you will be able to save up more for the future. It’s a plan to make sure Americans are being enriched, rather than taxed into oblivion.