Are Retirement Savings Safe From Tax Reform?
Unveiling President Trump’s tax reform proposal on April 26, Gary Cohn, Trump’s chief economic advisor and director of the National Economic Council, said that “retirement savings will be protected.”
While that was immediately reassuring to those concerned
that this version of tax reform
would undermine retirement savings like the 1986 version did, it’s not clear how that principle would be applied — the potentially sweeping tax reform proposal was a bit short on specifics.
“We’re very glad that the importance of retirement savings was specifically mentioned,” noted Brian Graff, Executive Director of NAPA and CEO of the American Retirement Association, commenting on the tax reform proposal rollout. “However, this is the beginning, not the end, and we need to remain vigilant. Let’s remember that it’s Congress that writes the tax law, not the president. This show is far from over.”
Senate Majority Leader Mitch McConnell (R-KY) was asked
about reports that the White House had floated the idea of getting rid of 401(k) plan tax preferences to help pay for the corporate tax cuts. McConnell somewhat dismissively said, “I’m sure everything will be floated in the context of comprehensive tax reform. It will provide plenty of opportunities for you all to write stories about what’s been rumored,” going on to say, “I don’t think the rumors are worth anything at this point.” McConnell acknowledged that it will be “challenging” to get everything in place, but concluded that he wasn’t “going to handicap the prospects of one or another suggestion.”
McConnell, House Speaker Paul Ryan (R-WI), Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Committee Chairman Kevin Brady (R-TX) issued a joint response to the tax plan, which is posted here
As Graff said, this is, of course, a proposal — the start of the debate about tax reform, not the conclusion. The proposal itself notes that the Trump administration plans to hold listening sessions with stakeholders to receive their input throughout the month of May, and that “working with the House and Senate,” the administration will develop the details of a tax plan that “provides massive tax relief, creates jobs, and makes America more competitive — and can pass both chambers.”
We shall see. And remain vigilant.