Will Congress’ Tax Plan Screw Up Your 401k? [VIDEO]
UNDATED - As Congress works on a plan to overhaul the tax code there has been some speculation they'll make changes to 401(k) plans to help pay for tax cuts.
The head of the House tax-writing panel says he's not ruling out changes to the retirement program. President Donald Trump says the plans may be used for "negotiating leverage", but he doesn't want any changes.
Steve Laraway of Laraway Financial in St. Cloud says their options could include taxing our 401(k)s.
They could means test it where they'd look at your income tax return and at a certain income level they'd phase out the amount of money that you can put in. Because, when you do put money into a 401(k) it's before tax, so now they'd be able to tax this amount if you'd put in more than that.
Laraway says another option could be to limit the amount we are allowed to put into our 401(k) each year. Right now it's capped at $18,000, with a catch-up provision of $24,000 for people over the age of 50. He says the average person is probably contributing about $5,000.
Laraway says he believes doing anything with 401(k) would be a bad idea.
The White House is praising the House passage of a budget Thursday as a necessary step for a tax overhaul.
The Associated Press contributed to this story.