President Trump is preparing to roll out a housing pitch built around Americans' retirement savings. National Economic Council Director Kevin Hassett said Friday that Trump will unveil a proposal at next week's World Economic Forum in Davos that would let people tap their 401(k) accounts to help cover a down payment on a home, Bloomberg reports. The idea, Hassett told Fox Business, is that a portion of the home's equity would then be treated as an asset inside the 401(k), allowing the retirement account to keep growing over time.
Details are still being hammered out, including how such withdrawals would avoid the current tangle of taxes and penalties that often accompany early use of retirement funds. Housing costs remain a frontline political issue, with 30-year mortgage rates roughly twice what they were before the pandemic. Hassett linked the new proposal to recent steps by Trump aimed at the mortgage market, including a directive for Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities to try to narrow the rate spread on home loans.
First-time home buyers under age 59½ can take up to $10,000 out of their individual retirement accounts to buy a home without paying a penalty, per the Wall Street Journal. But 401(k)s and similar employer-based accounts don't allow those early withdrawals unless a 10% penalty is paid. "Fewer people are buying homes right now than we've seen pretty much in my lifetime," Hassett said, arguing that the announcement has already produced a noticeable market response. He suggested White House officials believe the effort could proceed without legislation.
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