Wall Street ‘furious’ over proposal to drastically reduce 401(K) cap

Wall Street ‘furious’ over proposal to drastically reduce 401(K) cap

[Ed. – This proposed cap reduction really doesn’t make sense, from what I can tell.  Even with the proposed reductions in tax bracket rates, it looks like it would have to affect a lot of retirement savers negatively.]

Wall Street pushed back hard on Friday against a report that congressional Republicans are weighing a plan to severely limit the amount of money Americans can contribute to their 401(k)s.

The Capitol Hill lawmakers, searching for ways to pay for President Trump’s broad proposed tax cuts, are eyeing a $2,400 cap on pre-tax contributions to 401(k) plans, used by millions of US workers to save for retirement.

Currently, the pre-tax limit for such contributions is $18,000 a year.

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Contributions to 401(k)s are tax-deferred, which means that the government won’t be able to get its cut until retirees start withdrawing money from those accounts — which they must do by age 70¹/₂.

As the number of US workers covered by pension plans shrinks, 401(k) plans are becoming more widely used — and necessary.

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