President Donald Trump will announce a plan next week allowing Americans to use funds from their 401(k) retirement accounts for home down payments, National Economic Council Director Kevin Hassett said Friday.
Hassett disclosed the proposal during an interview with Fox Business, saying Trump would present the final plan at the World Economic Forum in Davos, Switzerland next week.
The mechanics of the program are still being finalized, according to Hassett. He outlined one potential approach: a homebuyer could put 10% down on a home and then transfer 10% of the home’s equity into their 401(k) as an asset. As the home appreciates in value, the retirement account would grow accordingly.
“Your 401(k) will grow over time,” Hassett said. “As the value of your house grows, you’ll be healthy, have more money for retirement, and you’ll have solved the liquidity constraint problem and got yourself a house early in life.”
The housing proposal comes as the Trump administration has made affordability a priority. Hassett noted that monthly mortgage payments have roughly doubled for typical families, while required down payments have increased from approximately $15,000 to $32,000.
Currently, Americans can borrow or withdraw money from 401(k) accounts for home purchases, but such moves typically involve penalties and taxes for withdrawals before age 59½. While IRAs offer a first-time homebuyer exception, 401(k) plans do not.
The housing initiative is part of a broader effort by the administration. Last week, Trump directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds in an attempt to lower mortgage rates and make homeownership more affordable.
Read the full article here
