Trump says 401(k)s are safe from tax overhaul.

House committee head hints tweaks to retirement savings program are still possible

WASHINGTON — President Donald Trump shot down a possible approach for raising revenue to finance tax cuts in politically must-do legislation for the Republicans, promising Monday the popular 401(k) retirement savings program will be untouched.

Still, the head of the House’s tax-writing committee indicated that changes to the 401(k) structure may still be on the table as Republicans push an ambitious timetable to get tax legislation written. Asked about the issue, Ways and Means Committee Chair Rep. Kevin Brady said: “I don’t want to get ahead of the committee. That will all be part of the tax reform bill.”

And in response to whether Trump’s tweet changes in any way what the panel was planning to do, Brady replied only, “no.”

Republicans are scrambling to find new revenue sources to pay for anticipated tax cuts exceeding $1 trillion. A proposal to eliminate the widely-used federal deduction for state and local taxes has run into heavy opposition from GOP House members from hightax states, threatening tax legislation that Republicans deem essential to retaining their majority in next year’s elections.

Trump pledged in a tweet there will be “no change” to tax incentives for the 401(k) retirement programs.

The No. 2 Republican in the Senate, Majority Whip John Cornyn of Texas, said he’s “sympathetic” to Trump’s opposition to curbing 401(k)s because “we don’t want to discourage people from saving.”

But he cautioned against ruling out ideas at this stage of the legislative process. “I do think we need to be careful because there are going to be a lot of different trial balloons, and what counts is how you put all this together,” Cornyn said.

The plan crafted by Trump and Republican leaders calls for steep tax cuts for corporations and potentially individuals, a doubling of the standard deduction used by most Americans, shrinking the number of tax brackets from seven to three or four, and the repeal of inheritance taxes on multimillion-dollar estates. The child tax credit would be increased and the tax system would be simplified; most Americans would be able to file their income taxes on a postcard, according to the plan.

With the possibility of the state and local deduction being at least partly preserved, some GOP lawmakers were considering limiting the amount workers could save in 401(k).

“It was a trial balloon and it crashed,” said Brian Riedl, a senior fellow at the conservative Manhattan Institute. “They’re struggling to find legitimate offsets” for tax cuts.