Trump to Propose Using 401(k) Savings for Home Down Payments
President Trump will unveil a plan at Davos allowing Americans to use 401(k) funds for home down payments, details and tax implications still under development.
Overview
President Donald Trump will present a plan at the World Economic Forum in Davos to permit Americans to use 401(k) retirement savings for home down payments.
National Economic Council Director Kevin Hassett outlined a proposed mechanism: buyers could put 10% down and transfer an equivalent share of home equity into their 401(k) as an asset.
Under current rules, 401(k) withdrawals before age 59½ generally incur income taxes plus a 10% early-withdrawal penalty; IRAs have a first-time homebuyer exception that 401(k)s lack.
The proposal complements other administration moves: directing Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds and proposing limits on corporate single-family home purchases.
Housing economists warn tapping retirement funds may not solve affordability, risks draining retiree savings and could leave homeowners exposed if property values decline or market volatility increases.
Analysis
Center-leaning sources frame the proposal skeptically, emphasizing political motives and risks. They stress Trump's electoral timing and the plan's sparse details, foreground critical experts (Fairweather, DerGurahian), use cautionary language ('won't solve', 'concern'), and thereby prioritize potential economic harms and political context over policy benefits.
Sources (3)
FAQ
Buyers could put 10% down on a home and transfer an equivalent 10% share of the home's equity into their 401(k) as an asset, allowing the 401(k) to grow with the home's value.
Withdrawals before age 59½ generally incur income taxes plus a 10% early-withdrawal penalty, unlike IRAs which allow up to $10,000 penalty-free for first-time homebuyers.
Directing the purchase of $200 billion in mortgage bonds from Fannie Mae and Freddie Mac to lower rates, and proposing limits or bans on corporate and institutional purchases of single-family homes.
It risks draining retirement savings, may not solve affordability issues, and could expose homeowners if property values decline or markets become volatile.
President Trump will present the final plan at the World Economic Forum in Davos next week.
History
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