SPRINGFIELD, Mo. -- President Trump is reassuring Americans tonight who are worried about news reports that the Congress is considering drastically reducing the amount of money you can put into your 401(k) before taxes are taken out. The president tweeted today that there will be "no change" to the tax incentives for 401(k) accounts.
Dean Young is a financial planner and one of the founders of Heim, Young & Associates, Inc. He explained to us how contributions to a 401(k) account are currently set up, “You can generally speaking put up to $18,000 into a 401(k) each year, if you can afford to do so. And then that doesn’t count what your employer puts in. If you’re 50 years of age or older, you can put an extra 6,000 or a total of 24,000 away. And that’s to allow people as they get closer to retirement to “catch up” so to speak.”
Lawmakers have reportedly discussed lowering the tax deductible amount to as low as $2400 -- but again, President Trump said today that he will not let this happen.
When we asked Young why a cap like this would be put in place, he explained, "they're trying to find ways to cut tax rates, but also find ways to keep tax revenue coming into the government so they can afford to pay their bills as well."
Financial planners like Young, though, don't think this is something we need to be worrying about just yet. He said, "It could take a long time to get everything finally agreed to. But the goal would be, I believe to get a fairer, simpler system in place that can help increase the overall growth of the economy so that everyone can benefit."
Some of the advice Young wanted to remind people, especially those starting off in their career is, "Don't worry about starting small, it's much better to do that than wait 10 or 20 years. Then, you really do have to play catch up and it's a lot harder to do."
If change does happen and you are worried about your financial statues, you can always reassess your plan with tax and financial advisers.