President Donald Trump said there will not be changes totax-deferred retirement savings plans under his proposed tax plan,shooting down reports that House Republicans were consideringtweaking or capping one of the most popular breaks.

“There will be NO change to your 401(k),” Trump said Monday onTwitter. “This has always been a great and popular middle class taxbreak that works, and it stays!”

Trump's declaration is the first time he has weighed inspecifically on this portion of the tax overhaul debate.Republicans had been considering reducing the cap on the annualamount workers can set aside for their 401(k) retirement accounts,according to a New York Times report on Friday.

Workers can currently put as much as $18,000 —or as much as$24,000 for workers over 50 —in those accounts each year withoutpaying taxes up front.

Capping that amount had been rumored for months as a way to helpoffset the individual and corporate tax cuts that the Trumpadministration hopes to enact by year-end. But it would essentiallypull future tax revenues forward by requiring Americans to paytaxes on retirement savings now instead of when they tap their nesteggs.

Wall Street has been girding for possible changes to the lucrative401(k) industry, which in recent decades has funneled trillionsof pretax dollars from workers' paychecks into stocks, bonds andother financial assets.

Trump has made tax cuts the centerpiece of his legislativeagenda and he issued a broad framework in September that, amongother things, called for a reduction in the corporate income taxrate to 20% from the current 35%. He's also repeatedly said thatthe middle class must benefit from the tax cuts.

At the same time, Trump has sought to highlight the rise in thestock market during his presidency, tweeting at least seven timesin the last week about rising markets.

“Stock Market hits another all time high on Friday. 5.3 trilliondollars up since Election,” he tweeted Saturday. “Fake News doesn'tspent much time on this!”

The Times reported Friday that Republicans were consideringreducing the cap on tax-deferred 401(k) contributions to as low as$2,400. The Times said its report was based on interviews withlobbyists, tax consultants and congressional Democrats it didn'tname. That raises the possibility that those hostile to the ideaare leaking details in an effort to raise an outcry beforeRepublican lawmakers finish drafting the tax overhaul.

Republicans have so far struggled to find offsets for the steeptax cuts they have offered to both individual and corporate taxrates. After seeking to eliminate the tax deduction for state andlocal taxes, Republicans may be considering changes to ensure thatmiddle-class Americans don't end up with a tax increase.

The Senate adopted a 2018 budget resolution last week allowingfor increasing the federal deficit by about $1.5 trillion—before considering any economic growth from the planned taxchanges. The House may vote as soon as this week on the Senatebudget resolution, which is a crucial step to passing a tax billwith only Republican votes.

From: Bloomberg News

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