WASHINGTON D.C (VINnews) — President Trump is set to announce a proposal next week that would let Americans tap their 401(k) retirement accounts to help cover down payments on homes, according to a top White House economic adviser.
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National Economic Council Director Kevin Hassett revealed the plan during a Friday interview on Fox Business, stating that Trump would present the details at the World Economic Forum in Davos, Switzerland.
“We’re going to allow people to take money out of their 401(k)s and use that for a down payment,” Hassett said, adding that officials are still finalizing the mechanics of the initiative.
Under current rules, first-time homebuyers under age 59½ can withdraw up to $10,000 penalty-free from an IRA for a home purchase (though income taxes may apply). However, early withdrawals from 401(k) plans and similar employer-sponsored accounts generally trigger a 10% penalty plus taxes.
Hassett floated a potential structure to mitigate retirement risks, suggesting that buyers could use 401(k) funds for a down payment — for example, 10% — and then treat a corresponding portion of home equity as an asset in the retirement account, allowing it to appreciate alongside the property value.
The proposal is the latest in a series of Trump administration efforts to address housing affordability amid high prices, elevated mortgage rates, and widespread concerns about the cost of living. Recent announcements have included directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds to lower borrowing costs, as well as steps to restrict large institutional investors from acquiring additional single-family homes.
Trump has emphasized these measures as part of a broader push to make homeownership more accessible, with more details expected during his Davos address.
Experts have mixed views on the idea. Supporters argue it could help liquidity-constrained buyers enter the market, while critics warn that easing access to retirement savings might jeopardize long-term financial security — particularly since only a subset of Americans have substantial 401(k) balances. Some analysts note that the core issue remains a shortage of housing supply rather than demand-side incentives alone.
The plan’s implementation could require regulatory changes, legislation, or an executive order, with tax implications still under discussion. The White House has not yet provided full details on eligibility, withdrawal limits, or safeguards.
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