Congress is being asked to treat all 401k contributions as if they were made to a Roth IRA. It's part of the simplified tax code President Trump is backing.
Houston CPA Bob Fumagalli says it would have a terrible impact on people saving for retirement.
“That's the rules of the game that we have played with now, I don't know, probably since I've been in this business, since 1980,” Fumagalli says, “and for them to change everything now, you really wonder what they're going to do.”
The Federal government wants any revised tax code to be revenue-neutral. What isn't collected in corporate taxes has to come from somewhere else.
Taking away the upfront tax benefits could raise an additional $1.5 trillion over the next decade -- $500 billion over the next four years.
This leaves retirement planners and their customers worried.
“Until they do something, you can't really plan for it,” he says. “Them talking about 401k plans and what they're going to do to them is indeed scary.”