GOP, Trump not on same page with 401(k) changes

WASHINGTON» House Ways and Means Committee Chairman Kevin Brady on Wednesday suggested that his upcoming tax bill could force changes to 401(k) plans and other retirement accounts, a move that would buck a promise from President Donald Trump that those accounts would be left alone.

The Republican congressman from Texas, speaking at a breakfast hosted by the Christian Science Monitor, said, “We think in tax reform we can create incentives for people to save more and save sooner.”

Brady, who is expected to introduce a tax bill next week, said he was “working very closely with the president” on the issue. He added that many people who have tax-incentivized retirement accounts contribute $200 per month or less, a level he thought was too low.

“We think we can do better,” Brady said. “We are continuing discussions with the president, all focused on saving more and saving sooner.”

Several hours later, Senate Finance Committee Chairman Orrin Hatch, R-Utah, also said he would oppose Trump’s vow to protect 401(k) plans but that he was open to changes if they made sense. “I’m open to look at anything,” Hatch said Wednesday morning. “I don’t have any problem looking at everything.”

He also said he doesn’t feel pressure to change the Senate’s eventual tax bill because of pressure from the White House. “No, I don’t think so,” Hatch said. “He has his point of view, and he may prove to be right in the end. We’ll just have to see. But I’m open-minded about it.”

Hatch said he hasn’t spoken with Trump about the 401(k) issue since the president sent his directive about it Monday morning.

Trump on Wednesday told reporters “401(k)s are very important,” noting their benefits for the middle class. And while he praised Brady as “fantastic,” he said it was unwise to negotiate on any changes to the tax code’s treatment of retirement plans.

Hatch is the top tax writer in the Senate, and he and Brady have outsized influence over how the tax legislation comes together.

Economists and financial advisers often urge people to begin saving for retirement as soon as possible because investment savings compound and grow much faster when people start contributing to it at a younger age.