President Trump vowed Monday that the tax break for 401(k) plans will be kept in place under the administration’s tax reform proposal, despite reports to the contrary.
“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!” he tweeted early Monday.
Republicans have been discussing sharp reductions in the amount of money that could be invested tax-free in the popular retirement accounts, according to reports over the weekend in numerous news outlets. Among those working on tax reform, the 401(k) deduction has been part of those discussions for months.
To offset deficit increases caused by tax cuts, some popular tax deductions will need to be eliminated. For example, the deduction for state and local taxes is on the chopping block in current discussions.
Related: 401(k) contribution limit will rise to $18,500 next year
Despite Trump’s tweet Monday, there have been numerous instances where his promises have not been born out by actual legislation.
He promised repeatedly to make no cuts in Medicaid, then pushed for a replacement for Obamacare that would have made sharp cuts in money for Medicaid. He has repeatedly said that his tax plan would benefit middle income taxpayers and not the wealthy — even though independent analysis of the plan shows that it is the wealthy who stand to benefit the most.
CNNMoney (New York) First published October 23, 2017: 8:19 AM ET