Republicans Look At Limiting 401(k) Contributions

Oct 21, 2017

Lawmakers are eyeing ways to keep Americans from using their pre-tax dollars to save for retirement. Republicans are looking at lowering the amount of money that people can put into their 401(k) plans. Currently people can contribute up to $18,000 every year. People don’t pay tax on the money until it is pulled out. Republicans want to lower the amount to $2,400 a year. Any additional money that people want to save could be put into a Roth 401(k) where the money is taxed up front but not taxed when taken out in retirement. By limiting the amount of pre-tax dollars people can save, the federal government would see an increase in tax money. An estimated 55 million Americans use 401(k) plans. They hold $5 trillion in assets. In September House Majority Leader Kevin McCarthy disputed the idea that Republicans wanted to tax 401(k)s “Why would you punish people when they’re actually saving for their own retirement and they’re not looking to government? You want to incentivize that even further. Don’t punish people who actually save their own money.”