(NewsNation) — The Trump administration says its new housing plan would let U.S. workers withdraw from their 401(k) retirement funds — penalty-free — to get a house.

Currently, people typically cannot withdraw money from their retirement savings account early without incurring a penalty from the IRS.

The White House’s latest plan would waive any fees if the funds are used for a down payment, but critics warn it doesn’t really solve the affordability problem and could actually put your retirement at risk.


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“Suppose that you put 10% down on a home, and then you take 10% of the equity of the home and put it as an asset in your 401(k),” White House economic adviser Kevin Hassett said Friday. “Then, your 401(k) will grow over time as the value of your house grows.”

Hassett pointed to doubling down payment costs, up from an average of $15,000 pre-pandemic to now $30,000. A Realtor.com analysis found it now takes families about 7 years to save that up, twice as long as before.

Dipping into a 401(k) could make the process move quicker. But only about half — 54.4% — of Americans have a retirement account, and even fewer have 401(k)s, according to Federal Reserve and Congressional Research Services data.


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Sergio Altomare, CEO of real estate private equity and development firm Hearthfire Holdings, told Nexstar’s NewsNation that the people who need the most help are also the least likely to benefit from Trump’s plan.

“There’s still a lot of work that needs to go into addressing affordability for the individuals on the lower rung of the income chain,” he said. “To me, this will not address that.”

Sergio said a worker would need to be 35 to 40 years old with steady employment to even have enough saved for the plan to work.

“Something like this on the 401(k), on its own, you may increase access for some portion of the population, but we know that a lot of people won’t be impacted,” he said.


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Even if a person accesses their retirement for a down payment, it is essentially robbing future retirement funds — and that has to be made up somewhere down the road, he added.

“For something like this to really take hold and take shape, No. 1 is it’s got to come with an education component around it. What are the risks?” Altomare asked. “What are the ramifications of hitting your 401(k) early? Maybe adding some limits to it so people don’t deplete it to buy their dream home too soon.”

Whether there will be limits is still unclear. Trump is expected to fill in more blanks about the plan this week at the World Economic Forum in Switzerland.

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