Trump Pours Cold Water On 401(k) Down Payment Idea

President Donald Trump appears to be backing away from the idea of allowing homebuyers to tap their retirement accounts without tax penalties to fund down payments — a proposal that had been publicly floated by his economic team but met with skepticism from housing experts.

Speaking to reporters Thursday while returning to Washington from the World Economic Forum in Davos, Switzerland, Trump said he is “not a huge fan” of using retirement savings for down payments, adding that he prefers Americans keep their 401(k) balances intact.

“I’m so happy with the way 401(k)s are doing,” the president said.

The comments contrast with statements made earlier this month by Kevin Hassett, director of the White House National Economic Council. On Jan. 16, Hassett said the administration was working on a proposal to allow penalty-free withdrawals from retirement accounts for home purchases — an announcement widely expected during Trump’s speech in Davos.

“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),” Hassett said in an interview with Fox Business Network. “Then your 401(k) will grow over time as the value of your house grows. … More money for retirement and you’ll have solved the liquidity constraint problem and gotten yourself a house early in life.”

Instead, Trump used his Davos address to announce what he described as a “ban” on large institutional investors purchasing single-family homes. He also said he had directed the government-sponsored enterprises (GSEs) to acquire up to $200 billion in mortgage-backed securities (MBS), and had called on Congress to cap credit card interest rates at 10% per year.

Following the Davos trip, Hassett suggested the 401(k) proposal could still be unveiled during the State of the Union address later in February. But Trump’s remarks appeared to cool expectations. During the speech, he highlighted strong stock market performance, noting that rising equity values had added trillions of dollars to Americans’ 401(k) accounts.

Under current rules, individuals can withdraw from a 401(k) without penalty at age 59½ — or at age 55 if they leave or lose their job. Earlier withdrawals generally trigger a 10% penalty, and the amount withdrawn is taxed as ordinary income.

Housing experts have said that while penalty-free access to retirement savings could ease one of the biggest barriers to homeownership — saving for a down payment — it could also undermine long-term retirement security. Any changes to 401(k) withdrawal rules would require congressional approval, and if enacted, could increase housing demand with potential implications for home prices.