Trump admin proposes allowing use of 401(k) for home down payments how you could reap the benefits

President Trump is set to reveal a plan next week to allow US homebuyers to make withdrawals from their 401(k) accounts in order to make a down payment on a house, a White House official said.The plan, signaled on Friday by National Economic Council Director Kevin Hassett in an interview on Fox Business News, is the latest attempt by the Trump administration to ease the housing affordability crisis ahead of midterm elections this year.“We’re going to allow people to take money out of their 401(k)s and use that for a down payment,” Hassett told Fox Business’ “Mornings with Maria” on Friday.Hassett downplayed concerns that allowing savers to tap into their 401(k)s could hurt them later in retirement, saying the White House is working on a “simple” way to allow withdrawals without hurting overall savings.“We’re still talking about the mechanics of it, but suppose that you put 10% down on a home, and then you take 10% of the equity of the home, and put it in as an asset in your 401(k), then your 401(k) will grow over time,” he continued.President Trump will present the final plan during the economic conference in Davos, Switzerland, next week, he added.Americans are currently unable to withdraw funds from a 401(k) for a first-time home purchase without paying a tax penalty.Those who make withdrawals before age 59 ½ must pay an additional 10% tax, unless they are eligible for a specific exception, according to the IRS.There is already a first-time homebuyer exception that allows penalty-free withdrawals up to $10,000 from IRA, SEP, SIMPLE IRA and SARSEP plans, but it does not include 401(k)s.It’s unclear whether the new exception that Hassett announced would also cap out at $10,000. “President Trump pledged to improve housing affordability for Americans still reeling from Joe Biden’s economic disaster, and the Administration is committed to exploring every tool possible to deliver for the American people,” White House spokesman Davis In...