House Republicans' long-awaited tax reform bill could affect your retirement

Posted at 5:16 PM, Oct 30, 2017
and last updated 2017-10-30 17:16:37-04

While the market rides record gains uncertainty is brewing on capitol hill. On Wednesday House Republicans are set to reveal the roadmap for  tax reform, looking to deliver a bill to President Trump's desk by New Year's Day. Hanging in the balance is your money and your retirement.

One controversial proposed change includes putting a $2,400 cap on your 401(k) tax deductions.
That means any contributions over $2,400 could be taxed now rather than when you withdraw the money for retirement.

Despite the secrecy from congress, Michael Carlisle with Alternative Tax Services in Tampa is telling his clients the best move is to still max out your 401(k).

"When they ask me what can you do now we are paying more money in taxes and it doesn’t make sense...I said 'well you and your wife have 401(k)s...max them out,'" he says. 

Financial advisor Terry O'Grady says one possible way to work around the 401(k) cap, if it does happen, is to put your money into a Roth IRA.

"So you want to sock away money and you don’t get the tax deduction now, just stick it into the Roth version," he says. 

Just last week President Trump tweeted there will be no change to your 401(k), but then 48 hours latter admitted that the changes could be used as negotiating tools for the Republican tax-reform bill.