On Monday, President Trump assured that the tax break for 401(k) plans will remain intact in the administration’s tax reform plan, despite conflicting reports.
“There will be NO change to your 401(k). This has always been a popular and effective middle-class tax benefit, and it will stay!” he tweeted early on Monday.
Reports over the weekend indicated that Republicans have been considering significant cuts to the amount individuals can invest tax-free in these widely-used retirement accounts. The 401(k) deduction has been part of ongoing discussions among those involved in tax reform for several months.
To counterbalance the budget deficits triggered by tax reductions, certain well-liked tax deductions may be eliminated. For instance, the deduction for state and local taxes is under serious consideration for removal.
Related: The contribution limit for 401(k) plans will increase to $18,500 next year
Despite Trump’s Monday tweet, there have been many cases in which his commitments have not aligned with legislation that was enacted.
He has made repeated promises to avoid cuts in Medicaid, yet has advocated for a replacement for Obamacare that would lead to substantial reductions in Medicaid funding. He has continually asserted that his tax plan would benefit middle-income taxpayers rather than the wealthy, even though independent evaluations suggest that it is the wealthy who would gain the most.
