10-23-17 4:22 PM EDT | Email Article

By Jeffry Bartash, MarketWatch

Some 55 million Americans use popular retirement savings plan

President Trump on Monday insisted 401(k) plans are untouchable amid reports suggesting Congress has floated the idea of slashing how much Americans can contribute to retirement.

(https://twitter.com/realDonaldTrump/status/922428118685581313)

Talk of changes to 401(k) plans has generated lots of negative press and a pushback from Wall Street. Some House Republicans reportedly considered cutting the limit on 401(k) contributions as part of an effort to help pay for massive tax cuts.

The contributions reportedly could be reduced to $2,400 a year from the current ceiling of $18,000 for people under 50, and $24,000 for those 50 and older. (The limit goes up to $18,500 to $24,500 in 2018.)

Yet such a move would undoubtedly be unpopular with voters, a fact the White House clearly grasps. Ditto for the Republican Party's leadership. Not a single major Republican has stepped forward to confirm the proposal is being seriously considered.

Also Read:Time to worry? Trump promises 'no change' for 401(k) plans in tax overhaul (http://www.marketwatch.com/story/time-to-worry-trump-promises-no-change-for-401k-plans-in-tax-overhaul-2017-10-23)

It's easy to see why. More than 55 million Americans participate in active 401(k) plans and the number is growing rapidly. (Millions of others rely on Roth IRAs, traditional pension plans and other retirement vehicles).

Although very few Americans max out on their annual contributions, most 401(k) participants easily exceed the purported $2,400 cap.

The people who would be especially hurt would be the middle and upper-middle class, groups that helped carry Trump to an upset victory in 2016. He won the majority of voters who earn between $50,000 to $199,000 a year, exit polls show (http://www.cnn.com/election/results/exit-polls).

Financial advisers say the biggest problem with retirement planning is not excessive savings, but a lack of savings. Only about two-thirds of private-sector workers in the U.S. have access to a 401(k) plan and not all of them sign up.

Low-income Americans are even worse off. They have less access to 401(k)s and much smaller balances.

-Jeffry Bartash; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

10-23-17 1649ET

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