Senate Democrats seized on rumors of Republican retirement plan contribution cuts, proposing an alternative on Tuesday that would increase tax-deferred savings in 401k accounts from $18,500 to $24,500.
They also said those over age 50 would be allowed to save an additional $6,000 per year, for a total of $30,500.
“What the Republicans plan to do to 401ks is an immediate tax hike on American retirement plans, period,” Senate Minority Leader Chuck Schumer, D-N.Y., said at a press conference announcing the plan.
“We have just been slack-jawed at the idea that they just cannot keep their hands off your 401(k),” said Sen. Ron Wyden D-Ore., told reporters.
Industry advocates were understandably pleased with the plan.
“Senate Democrats held a press conference on retirement policy issues this morning and proposed increasing the 401k limit to $24,500 and $30, 500 for those catch-up eligible,” Brian Graff, CEO of ARA, wrote on LinkedIn following the announcement. “The American Retirement Association supports this proposal!”
General confusion surrounding the marketing and messaging of the White House tax agenda has hamstrung the administration in recent weeks.
The cuts to allowable tax-deferred contribution limits to retirement plans, floated as part of the so-called “sausage making” surrounding a tax reform package, hit headlines in late October, after the IRS announced a contribution limit increase for 401ks and similar retirement plans for 2018.
Financial industry outcry from advocacy groups worried over the reports prompted a typical blustery, yet reassuring, tweet from Chief Executive Trump in the days that followed:
“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!”
However, Rep. Kevin Brady, the point person in Congress on tax reform, appeared to contradict the president, telling attendees of an event hosted by Christian Science Monitor that discussions on what may or may not happen are still underway.
While the president emphasized “no change to your 401k,” Brady countered “in tax reform, we can create incentives for Americans to save more and save sooner. We are exploring a number of ideas in those areas.”
True to form, Trump then equivocated, responding soon after with a “we’ll see” attitude.
“Well, we’ll use it as negotiating, but trust me, it’s one of the great things,” Trump said. “There are certain elements of deals that you don’t want to negotiate with — and Kevin knows this, and I think Kevin Brady is fantastic — but he knows how important 401ks are.”