Trump Touts Strength of 401(k)s; Downplays Rumored Use for Housing Down Payments
No wonder President Trump didn’t talk about his administration’s idea to allow 401(k) participants to use their retirement funds for a down payment on a house while speaking at the World Economic Forum in Davos on Wednesday. Turns out he’s not a fan of the idea after all—but he IS a big fan of how well 401(k)s are performing lately.
During one of his impromptu press gaggles aboard Air Force One while returning from Switzerland Thursday, President Trump was asked about the idea of allowing 401(k) funds to be used for housing down payments that was floated recently by his own chief economic adviser, Kevin Hassett.
“I’m not a huge fan. Other people like it. They’re talking about taking money out to put a deposit on a home. And one of the reasons I don’t like it is that their 401(k)s are doing so well. You know, 401(k)s are up 80, 90% in some cases,” Trump said. “The housing market is good, but the 401(k)s are doing much better than the housing market. I like keeping their 401(k)s in great shape.
“I’m not a huge fan of putting down a deposit—I’m not. I’m so happy with the way 401(k)s are doing. I’ve got people tell me they’re up 88%, and over the period of a year—over a full year it’s going to be close to 100%.”
While that may be true for many 401(k) participants with lower balances, most 401(k) participants did not see their 401(k) increase by anywhere near 80%. Still, 401(k) savers did have a strong 2025 due to stock market gains and steady contributions.
While full-year 2025 data on 401(k) balances is not available yet, the average 401(k) balance at Fidelity through the third quarter of 2025 was $144,400, up 5% from the second quarter of 2025 and a 9% increase from 2024’s third quarter. In 2025, the U.S. stock market, led by the S&P 500 achieving around 18% gains, saw its third consecutive year of double-digit growth.
401(k) housing down payment proposal up in the air
After President Trump skipped mention of the rumored proposal during his hour-plus remarks at WEF, Hassett hinted he’d instead do so during his State of the Union address to the nation next month. Given his remarks about it aboard Air Force One Thursday, it remains to be seen whether the proposal will ever actually see the light of day.
First-time homebuyers under age 59½ can currently withdraw up to $10,000 penalty-free from IRAs, but similar early access to 401(k) funds generally triggers a 10% penalty. Changing those rules would require tax-law revisions, a potentially difficult task in a closely divided Congress. While some penalty-free early withdrawals are already allowed for specific hardships, and most 401(k) plans permit loans that must be repaid with interest, the administration’s proposal could expand access to down payment funds for buyers unable or unwilling to take on a 401(k) loan.
Critics of the plan also warn that if it were enacted, it would only reach a narrow slice of Americans and could actually inflate housing prices by adding purchasing power without increasing supply. It also risks peoples’ future retirement security, as many 401(k) loans are never paid back due to job changes, layoffs or life disruptions.
As Ted Jenkin, president of Exit Stage Left Advisors and partner at Exit Wealth, wrote in a Jan. 23 op-ed on Fox News, the proposal amounts to a “classic case of robbing Peter to pay Paul and, in this case, Peter is your future self.”
Jenkins wrote that when people pull money early out of their 401(k), three brutally damaging things happen: you permanently shrink your retirement base; you lose years and sometimes decades of compounding interest; and most people never fully pay it back.
“If a 35-year-old pulls $50,000 from their 401(k) to buy a home and never replaces it, that single decision could cost them $300,000 to $400,000 by retirement, assuming long-term market averages. That’s just math,” Jenkins wrote.
SEE ALSO:
• Trump Skips ‘401(k)s for Housing Down Payments’ Details in Davos Speech
• Trump Plan to Use 401(k) Money for Housing Down Payments to be Revealed in Davos Next Week
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.