The Republicans in the House of Representatives unveiled their tax reform plan and there includes no substantial change to 401(k) plans. Everyone in the retirement plan industry and most individuals with common sense were outraged that there was even a suggestion that they would limit pre-tax deferrals to $2,400, thereby making the 401(k) plan a more Roth like plan.<\/p>\n
When I heard of the $2,400 pre-tax limit, I knew it wasn\u2019t going to happen. I\u2019m no political genius, but I knew that there would be enough uproar that such a drastic cut in the tax-deferred limit would be shelved. It\u2019s not genius, it\u2019s just I\u2019m a political realist and a Republican Congress needs every Republican vote they can get. And they wouldn\u2019t get it with such a proposal.<\/p>\n
Even the current proposal that limits state and local tax and mortgage deductions isn\u2019t likely to pass. That is why I don\u2019t think we are completely out of the woods yet. If the current bill fails, they will either shelve tax reform for now or they may revisit the issue of limiting deferrals t maybe a more negotiable amount like $10,000. I don\u2019t know, but I wouldn\u2019t be celebrating yet.<\/p>\n
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