Get Your Pitchforks Ready
A recent article in the Wall Street Journal
cautions: “Grab Your Pitchforks, Your 401(k) May Need Defending From Congress.”The article
(subscription required) covers ground we have heard for months now — that “The lucky participants in one of the best retirement plans around are coming after yours with a meat cleaver.” Those lucky individuals are, of course, the individuals in Congress who have both a pension and the much-envied Thrift Savings Plan (TSP).
The WSJ article cites a meeting with members of the Senate Banking Committee this month involving White House National Economic Council Director Gary Cohn at which they discussed ideas that would remove pretax benefits from retirement accounts, including 401(k)s, and shift them to after-tax/Roth treatment. It’s not a new idea, of course — then-Chairman of the House Ways & Means Committee Dave Camp unveiled a tax reform plan in 2014. That version included provisions including double taxation of retirement savings, a decade long freeze in contribution limit adjustments, and mandatory Roth contributions above specific contribution levels.
While it might be overshadowed by concerns about staving off a government shutdown, President Trump is expected to unveil his tax reform proposal this week. Speaking on Fox News Sunday, Director of the Office of Management and Budget Mick Mulvaney said that while specifics are still being determined, Wednesday’s announcement will include guidance, principles and “also some indication of what the rates are going to be.”
It’s doubtful that there will be enough specifics this week to know what that might mean for retirement plans or retirement savings. Nonetheless, former Assistant Secretary of Labor Brad Campbell, and now a partner in law firm Drinker Biddle & Reath LLP, told the WSJ that tax reform is “a game of winners and losers, and the retirement system is poised to be one of the losers.”
So, as the WSJ article concludes, “If you have a pitchfork in your garage, keep it handy. Your 401(k) might need defending.”