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 Ingle told The Post, adding that Trump will announce more initiatives soon.
The White House did not respond to inquiries about whether there will be a cap on withdrawals or when the plan will go into effect.
Trump has recently launched several other initiatives aimed at making homebuying more affordable, though their potential impact has been up for debate.
In a Jan. 7 Truth Social post, Trump said he will seek to ban large investors from buying and then renting out single-family homes, adding that “People live in homes, not corporations.”
He did not say exactly how his plan would work, promising to say more in Davos – but it represents a major initiative after roughly a decade of large investors and private-equity firms buying up hundreds of thousands of single-family homes.
Housing advocates have argued that widespread corporate ownership of homes can reduce supply and inflate prices, pushing homeownership even further out of reach.
Some analysts have noted that institutional investors own lots of properties in only some areas of the country – so a ban might not be enough to substantially lower prices for most Americans.
Instead, they have nodded to a lack of housing supply and pushed for local zoning and regulation to help with construction.
Firms that own 100 or more single-family homes only control about 2% of the nation’s single-family housing stock, according to John Burns Research and Consulting.
Trump also ordered a $200 billion mortgage bond-buying spree, arguing it would “drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable,” according to a Jan. 8 post.
Fannie Mae and Freddie Mac will do the purchases, according to Federal Housing Finance Authority Director Bill Pulte.
Mortgage rates briefly dipped below 6% for the first time in years, and mortgage refinance demand jumped 40% higher the week after the announcement.
Trump has also ramped up pressure on the Federal Reserve to slash interest rates.
Powell on Sunday shared he is under criminal investigation over his congressional testimony last summer concerning the Fed’s $2.5 billion headquarters renovation – a stunning escalation after months of Trump bashing Powell for not cutting rates fast enough.
Trump has yet to announce a replacement for Powell, but the odds of Kevin Warsh clinching the nomination soared on betting markets Friday after Trump said he’d like Hassett to stay in his role at the National Economic Council.
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