Ron Johnson: GOP Congress shouldn’t curtail 401(k) savings

Oct. 26--U.S. Sen. Ron Johnson is bristling at the possibility of reducing what Americans can save in 401(k) retirement plans, as the Republican-controlled Congress reportedly has considered through a broad overhaul of the federal tax code.

Johnson, R-Oshkosh, told CNN in a Thursday interview that "I wouldn't touch" 401(k) plans because Americans should be encouraged to save more for retirement. That's due in part to the fiscal challenges confronting Social Security, he said.

"This would be the worst time to dis-incentivize people from saving for their retirement," Johnson said.

President Donald Trump tweeted Monday that "There will be NO change to your 401(k)."

That followed reports last week that U.S. House Republicans, as part of the sweeping tax-overhaul push now underway on Capitol Hill, were considering a plan to sharply reduce the amount of income American workers could save in popular 401(k) accounts, which allow workers to save for retirement, tax-deferred -- in some cases, with contributions matched by their employer. About 55 million Americans have a combined sum of more than $5 trillion invested in 401(k) plans.

Even after Trump's tweet, multiple reports have indicated GOP congressional leaders continue to mull such changes as a means to help offset tax revenue lost through proposed tax cuts for businesses and individuals. On Wednesday, House Ways and Means Committee chairman Kevin Brady, R-Texas, suggested his forthcoming tax overhaul plan could force changes to 401(k) plans and other retirement accounts.

Sen. Tammy Baldwin, D-Madison, said in a statement that "the idea from Republicans to make it more expensive for Wisconsinites to save for retirement as a way to help pay for tax cuts for the top one percent is a bad deal."

"President Trump made the right decision when he promised to protect 401(k) plans," Baldwin said. "(Senate Majority Leader) Mitch McConnell and (House Speaker) Paul Ryan should keep that promise."

What separates 401(k) plans from other retirement accounts is they allow workers to save more on a tax-deferred basis. This year, workers can set aside as much as $18,000 in their 401(k) plans, while workers age 50 and older can contribute as much $24,000.

The larger tax overhaul framework released by Trump and congressional Republicans last month would reduce the number of individual income tax brackets, eliminate deductions and exemptions, and repeal the estate tax. It also would slash tax rates for corporations and pass-through businesses.

As part of those talks, Johnson is pushing a proposal to overhaul the corporate tax code by changing the tax treatment of C-corporations to match that of so-called "pass-through" entities such as S-corporations and limited liability corporations.

The Associated Press contributed to this report.

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