After word leaked that proposal for tax reform may include a provision limiting pre-tax salary deferrals to $2,400, President trump said any proposal limiting deferrals wasn’t likely. Then about a day or so later, Trump said that discussion about limiting deferrals would be on the table.
Before anyone with an ax to grind against the President, the fact is he really has no idea what will be in a tax reform proposal until he sees it. There are going to be many discussions as to which tax deductions will be sacrificed to achieve lower tax rates, so I think the $2,400 proposal will be considered. Quite honestly, I think that low number is absurd and won’t sustain inclusion when at least 2 Senate Republicans will fight it. Maybe they lower the tax-deferred limit to $9,000 or maybe they will lower the 401(a)(17) recognized compensation limit like they did in 1986 and 1993, but I think $2,400 is an absurd amount when defined benefit plans have been phased out and Social Security becoming more and more like a Ponzi scheme for people my age and younger.
I wouldn’t take stock into what the Presidents says what will happen, I will only take stock of what the tax reform bill will look like and its chances to pass and become law. Until then, your guess is as good as mine.
