While the tax reform talks didn’t do much to negatively impact 401(k) plans. Mark my words: the elimination of certain deductions will negatively impact the amount of deferrals that people will be able to put in their 401(k) plan.
Limiting the amount of deductions for mortgage and state and local taxation will hit middle and upper-middle class taxpayers in the pocketbook, which give them less room to make salary deferrals. While people will point that most Americans will receive tax cuts, a lot of people in some blue states won’t be getting any type of cut especially if they own an expensive piece of real estate in a big city or in the suburbs.
While the industry activated strong support against any tax reform that will negatively impact how much could defer, I think there are going to be quite a few taxpayers out there that will be cutting back on what they’ll defer.