Trump Undercuts Plan to Let Homebuyers Tap Retirement Plans (1)

President Donald Trump threw cold water on a policy his administration was developing to allow savers in 401(k) retirement plans to use some of that money for down payments on homes — a proposal that had been a key part of his efforts to address voters’ affordability concerns.

“I like keeping their 401(k)s — I’m not a huge fan of putting down a deposit. I’m not. I’m so happy with the way 401(k)s are doing,” the president told reporters aboard Air Force One as he returned to Washington from the World Economic Forum on Thursday.

The remarks mark an abrupt about face for Trump. Top White House economic adviser Kevin Hassett said on Jan. 16 that the president planned to unveil the full plan during his appearance at the annual gathering in Davos, Switzerland. After Trump failed to divulge more details, Hassett suggested they would come out during Trump’s State of the Union speech in late February.

Yet even before the Davos speech, the proposal had stumped some real estate analysts who noted that prospective homebuyers can already borrow against their 401(k) accounts if needed, though they have to repay the loan with interest. It also would affect a narrow slice of the labor market and, to the extent it did bring more money into the housing market, would likely serve to drive up home prices.

Read: Trump Vows US Won’t Be a ‘Nation of Renters’ in Davos Speech

Much of Trump’s speech in Davos focused on his interest in acquiring Greenland, but he did touch on other aspects of his housing and affordability agenda. The president hailed an executive order he signed Tuesday that aims to limit institutional home purchases and he reiterated his desire to limit credit card interest rates.

But for now, the president’s latest comments suggests the 401(k) component of his affordability plans — meant to address voters’ concerns heading into this year’s midterm elections — is being shelved.

“Other people like it,” Trump continued. “They’re talking about taking money out to put a deposit down on a home. And one of the reasons I don’t like it is that their 401(k)s are doing so well.”

(Adds questions about housing plan in fourth paragraph.)

--With assistance from Jennifer A. Dlouhy.

To contact the reporters on this story:
Hadriana Lowenkron in Washington at hlowenkron@bloomberg.net;
Katy O’Donnell in Washington at kodonnell67@bloomberg.net

To contact the editors responsible for this story:
Justin Sink at jsink1@bloomberg.net

Jordan Fabian, Bill Faries

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