Trump To Float Plan To Tap Retirement And 529 Accounts For Home Down Payments

• January 14th

by UrbanTurf Staff

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President Trump is reportedly drafting an executive order that would allow Americans to withdraw money from their retirement accounts and 529 college savings plans for home down payments without facing a 10% early withdrawal penalty. 

Under current federal law, pulling money from a 401(k) before age 59½ or using 529 funds for non-education expenses triggers that 10% penalty. There's already an exception that lets first-time buyers withdraw up to $10,000 penalty-free from an IRA, but this new proposal would expand that to cover retirement and education savings accounts more broadly.

The catch? An executive order alone can't change the tax code. Because the Internal Revenue Code specifically lays out which early withdrawals are penalty-free, Congress would need to act to make this happen.

This is the third proposal that Trump has floated in recent days to help invigorate the housing market. He has also directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities with the goal of bringing down mortgage rates, in addition to taking steps to prohibit large institutional investors from purchasing single-family homes.

Trump has indicated he'll share more details about his housing initiatives at the World Economic Forum in Davos later this month. 

This article originally published at https://dc.urbanturf.com/articles/blog/trump_floats_plan_to_tap_retirement_and_529_accounts_for_home_down_payments/24215.