No, 401(k)s Aren't a 'Great and Popular Middle Class Tax Break'

Following reports that congressional Republicans were, as part of a planned tax reform, considering a cap on contributions to tax-deferred 401(k) plans, President Trump on Monday promised such a change wouldn’t happen. “There will be NO change to your 401(k),” the president tweeted. “This has always been a great and popular middle class tax break that works, and it stays!”

But even as he rushes to the defense of 401(k)s, the president—with the help of fellow Republicans on Capitol Hill—has over the course of his presidency already made it harder for millions of Americans to save for retirement. In fact, he managed to squeeze two misleading statements into his tweet about 401(k)s. First, the benefits of tax-deferred 401(k) plans currently flow disproportionately to households near the top of the income distribution—not the middle class. And second, the current strategy of encouraging retirement savings through tax incentives such as 401(k) plans is not one that “works.” According to a recent estimate from researchers at the Census Bureau, of American workers