One controversial idea would reduce the amount of pretax pay-ins to 401(k)s. Up to 50% of the annual pay-in limit…$18,000 in 2017, plus $6,000 for individuals who are 50 or older…would be allowed to go into a traditional pretax 401(k), with any excess going into a Roth 401(k). The idea is to slash the up-front tax savings for people who max out their 401(k)s and thus raise revenues to pay for tax rate cuts. Right now, employees can contribute to a pretax 401(k), an after-tax Roth 401(k) or a combination of the two, provided their employers offer these savings options. This proposal would take some of that freedom of choice away from employees.

Another idea is to ban all future contributions to traditional IRAs. Instead, deposits would go to Roth IRAs. Ending IRA deductions would raise revenue to pay for tax cuts now, but tax-free Roth withdrawals would squeeze revenue later.

Potential Trump Tax Changes

by | Jun 15, 2017 | 401(k), IRA, Retirement, TallyTaxMan, Traditional IRA | 0 comments