Hitting GOP, Dems pitch raising 401(k) caps

Hitting GOP, Dems pitch raising 401(k) caps
© Camille Fine
Senate Democrats on Tuesday unveiled a plan to let Americans contribute a greater amount of untaxed income to 401(k) retirement accounts — a clear response to Republicans considering more stringent limitations as part of their tax overhaul.
Currently, people under 50 can contribute up to $18,000 a year in pre-tax dollars into 401(k) retirement accounts through their employers. Republicans had reportedly discussed lowering that amount to $2,400, though backtracked somewhat after President Trump tweeted that no changes were coming.
Still, GOP congressional tax writers have refused to rule it out as they prepare for the Wednesday unveiling of their tax plan.
Democrats say they would raise the cap to $24,500, as well as provide tax credits to employers that match funds and create a new type of IRA retirement program for those without employer-sponsored plans.
“We’re really proposing something that will protect the freedom of American families to save for retirement on a pretax basis,” said Sen. Debbie StabenowDeborah (Debbie) Ann StabenowSenators push HHS to negotiate lower prices on opioid overdose reversal drug Senators press administration on mental health parity Progressive groups launch M midterm initiative in three battleground states MORE (D-Mich.), adding that only 18 percent of Americans felt that they had saved enough for retirement.
Sen. Sheldon WhitehouseSheldon WhitehouseDem senators demand Trump explain ties to Koch brothers Overnight Energy: Senate confirms Bridenstine as NASA chief | Watchdog probes Pruitt’s use of security detail | Emails shine light on EPA science policy changes EPA inspector general to probe Pruitt's use of taxpayer-funded security detail on trips to Disneyland, Rose Bowl game MORE (D-R.I.) accused Republicans of meddling with retirement plans for what amounted to a budget gimmick. Funds in 401(k)s are taxed when they are withdrawn, though the rate is usually lower for those in retirement than it would be when they put the money into the account.
Allowing less pretax dollars into the accounts, Whitehouse said, would only create the appearance of adding more tax revenue, because the Republican plan would mean less tax revenue when people withdraw their retirement funds.
“It does create phantom revenues,” he said.
Republicans are struggling to find $4 trillion in revenue raisers to offset the tax cuts they are proposing. If they do, they will still add up to $1.5 trillion to the deficit, the most allowed by their budgetary framework.