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Fiscal Cliff: Why Congress Might Have to Mess with the 401(k)
Time ^ | 11/29/12 | Dan Kadlec

Posted on 11/29/2012 11:20:58 AM PST by Perdogg

One of the earliest fears about tax-favored savings accounts like IRAs and 401(k) plans was that when this pool of savings grew large enough Congress would not be able to resist tapping it to help solve the nation’s debt problems. We’re about to find out if those fears—persistent for decades—have been justified.

Everything including the sacred mortgage deduction is on the table as lawmakers wrestle with the fiscal cliff, a year-end avalanche of scheduled spending cuts and tax increases. With a combined $10 trillion sitting in IRAs and 401(k) plans, retirement accounts make a juicy target. Some of this money has never been taxed, and under current law never will be.

(Excerpt) Read more at business.time.com ...


TOPICS: Breaking News; Business/Economy; News/Current Events; Politics/Elections
KEYWORDS: 0bamanation; 112th; 401k; apieceoftheaction; bho44; corruptbastards; debt; fairness; ghilarducci; nationalization; pension; pigford3; redistribution; retirement; savings; spending; spreadthewealth; taxandspend; theft; waivethis
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Suckers.......
1 posted on 11/29/2012 11:21:01 AM PST by Perdogg
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To: Perdogg

Go flat tax with no deductions.


2 posted on 11/29/2012 11:23:43 AM PST by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: Perdogg

Who? Those of us who took advantage of our employer 401(k) plans or the legislators who want to tax it?


3 posted on 11/29/2012 11:24:15 AM PST by rarestia (It's time to water the Tree of Liberty.)
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To: Perdogg

She said “spread the wealth”.


4 posted on 11/29/2012 11:24:40 AM PST by massgopguy (I owe everything to George Bailey)
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To: rarestia

The people who voted for 0bama and Dems.


5 posted on 11/29/2012 11:26:11 AM PST by Perdogg (Rep. Tom McClintock (R-CA4) for President 2016)
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To: Perdogg

The Federal govt already mandates minimal 401K withdrawals after age 70(?) or impose a penalty.

They have their sticky fingers on money earned, money saved, money invested and inheritances to children.

You didn’t earn that - someone else deserves it - and we’ll decide who and how much.


6 posted on 11/29/2012 11:26:38 AM PST by sodpoodle (Life is prickly - carry tweezers.)
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To: Perdogg

I believe Time is incorrect. There’s closer to $17 trillion in retirement accounts.


7 posted on 11/29/2012 11:27:08 AM PST by DoughtyOne (Hurricane Sandy..., a week later and over 60 million Americans still didn't have power.)
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To: Perdogg

They’re going to take your 401(k).

It’s not fair that worked your ass off and saved your money and will get something for it, when so many sat on their asses playing WoW and won’t get anything.


8 posted on 11/29/2012 11:27:10 AM PST by Tzimisce (What do you do when every every branch of the government is corrupt and aligned against you?)
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To: Perdogg

Congress?

Or the ‘Rats?


9 posted on 11/29/2012 11:27:18 AM PST by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: Perdogg

They do not have to do anything with them but, they do want to steal as much of them as they can.


10 posted on 11/29/2012 11:27:18 AM PST by Ratman83
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To: Perdogg

bkmk


11 posted on 11/29/2012 11:27:36 AM PST by Sergio (An object at rest cannot be stopped! - The Evil Midnight Bomber What Bombs at Midnight)
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To: Perdogg

Rush is covering this big time...


12 posted on 11/29/2012 11:28:12 AM PST by GSP.FAN (Some days, it's not even worth chewing through the restraints.)
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To: Perdogg

Many trial balloons are being floated with all of the hot air in D.C.


13 posted on 11/29/2012 11:28:37 AM PST by frogjerk (Obama Claus is coming to town!)
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To: sodpoodle

Keep it up Obama!...The second civil war is coming!


14 posted on 11/29/2012 11:28:37 AM PST by AngelesCrestHighway
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To: DonaldC

Just say the Bush’s tax cuts on the rich expire at the end of the year. There is the tax hike.

If Democrats and the MSM say it impacts everyone, remind them that that’s what they ran on for the last 8 years. Tax cuts for “Only” the rich.

And if they lied about that, did they also lie about WMD’s since they are blaming the intelligence community for its failure, is this the same intelligence community that reported on Iraq?

And on and on.


15 posted on 11/29/2012 11:28:37 AM PST by EQAndyBuzz (George W. Bush is the Emmanuel Goldstein of the modern era.)
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To: Perdogg

Fairness...


16 posted on 11/29/2012 11:28:46 AM PST by Eric in the Ozarks (In the game of life, there are no betting limits)
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To: Perdogg

17 posted on 11/29/2012 11:29:28 AM PST by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Perdogg

Notice they’re referring to IRAs as well as 401k’s.

They’re going after the retirement savings of the diligent in order to pay for Baraqoclaus gifts to their choice recipients.

Now, demographically, who’s going to be “giving” and who’s going to be “receiving”, do ya think.

Google “rhetorical question” before you answer.


18 posted on 11/29/2012 11:29:36 AM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Perdogg

The takers don’t have a big 401k, so neither should you, so sayeth Jaime Foxx’s lord and savior, Barack Obama.

If they want it, they’ll take it, and there’s not spit you can do about it.

Elections have consequences. But, as I’ve been hammered with the last day or so... Romney would do the same thing. Right?


19 posted on 11/29/2012 11:30:02 AM PST by brownsfan (Behold, the power of government cheese.)
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To: Perdogg

Why Congress Might Have to Mess with the 401(k)
>>>>>>>>>>>>>>>>

Confiscation of 401K and leave a promissory note?LOL.

Let them do it, and guaranteed there will be a violent revolt in arms all across the country.


20 posted on 11/29/2012 11:30:53 AM PST by Candor7 (Obama fascism article:(http://www.americanthinker.com/2009/05/barack_obama_the_quintessentia_1.html))
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To: Perdogg

Theresa Ghilarducci

21 posted on 11/29/2012 11:30:57 AM PST by TurboZamboni (Looting the future to bribe the present)
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To: Perdogg

welcome to your Twilight Zone...


22 posted on 11/29/2012 11:31:25 AM PST by AngelesCrestHighway
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To: Perdogg

The Left has gotten good at not attacking their targets head on.
In this case, they won’t tax 401ks directly, but instead will do something which will put a neutral third party at risk, compelled (”comply with regulations XYZ or get penalized out of business”) to perform the “tax” without the actual account owner having any choice in the matter.


23 posted on 11/29/2012 11:31:33 AM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: Perdogg

Even if they take over the retirement plans, just who exactly is going to buy all the stocks and bonds?


24 posted on 11/29/2012 11:31:53 AM PST by PeterPrinciple ( (Lord, save me from some conservatives, they don't understand history any better than liberals.))
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To: Perdogg

Shut mine all down and took the penalty in NOv. 2008, day after the election....

Fools I tell ya’, fools. Everyone saying they would never do this....

Look it is your money. They want to end it? The only thing you owe them is tax on that money. That was money you or your company put aside. That is YOUR money not the governments in any way shape or form.


25 posted on 11/29/2012 11:32:06 AM PST by EBH (0bama is guilty of willful neglect of duty.)
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To: Perdogg

The government wants your money, all of it, now!

The fiscal cliff and tax hikes on the rich nonsense is a smoke screen for the wealth confiscation that is well under way.


26 posted on 11/29/2012 11:32:14 AM PST by smoothsailing
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To: Perdogg
"With a combined $10 trillion sitting in IRAs and 401(k) plans"

So 10 Trillion is sitting in accounts waiting for the owners to claim their money?

I seriously doubt ANYONE can produce 10 Trillion dollars in one swoop because it does not physically exist.

27 posted on 11/29/2012 11:32:54 AM PST by Orange1998 (Please DO NOT PRESS CTRL W)
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To: Perdogg

I would think a lot of people would quit en masse and take the freaking penalty just to take their $$$ out of 401Ks. The bank of Stearns and Foster is going to do well in these times.


28 posted on 11/29/2012 11:33:34 AM PST by SueRae (It isn't over. In God We Trust.)
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To: Perdogg

and under current law never will be (taxed).


I am willing to be corrected but that is a lie.


29 posted on 11/29/2012 11:33:57 AM PST by PeterPrinciple ( (Lord, save me from some conservatives, they don't understand history any better than liberals.))
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To: frogjerk

This was floated by in 2007, 2008 already.

They have had 5 years at least to work on the legislation and propaganda to make this happen.

It is going to happen. I’d get out before they decide to freeze the 401k accounts. That is YOUR money.


30 posted on 11/29/2012 11:35:05 AM PST by EBH (0bama is guilty of willful neglect of duty.)
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To: TurboZamboni

She and Alan Colmes need to get together.


31 posted on 11/29/2012 11:35:43 AM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: SueRae

Very likely they’d shut down that possibility with no warning while they wrangled it out.


32 posted on 11/29/2012 11:36:32 AM PST by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: Ratman83

I’ve been thinking if Uncle Sham is bluffing, they win when you have most of the populace now with no savings and dependent on FedGuvInc in their old age.(No point in saving in a traditional bank account or CD since Uncle Sham is keeping interest rates artificially low.)

On the other hand,if rumors are fostered by the government to convince people to stop deposits and make early withdrawals to boost THIS YEARS’s taxable income, that buys them time to keep on spending ,wasting, and scheming.


33 posted on 11/29/2012 11:36:41 AM PST by TurboZamboni (Looting the future to bribe the present)
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To: EBH
"It is going to happen. I’d get out before they decide to freeze the 401k accounts".

NEVER in a Million Years. The results will make the Great Depression child play.

34 posted on 11/29/2012 11:39:38 AM PST by Orange1998 (Please DO NOT PRESS CTRL W)
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To: Orange1998

If the trillions in 401k’s and ira’s comes out of the stock market..look out below..


35 posted on 11/29/2012 11:42:05 AM PST by alamogal
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To: TurboZamboni

They are giong to get us either way.


36 posted on 11/29/2012 11:44:06 AM PST by Ratman83
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To: Perdogg
From the article:

Everything including the sacred mortgage deduction is on the table as lawmakers wrestle with the fiscal cliff, a year-end avalanche of scheduled spending cuts and tax increases. With a combined $10 trillion sitting in IRAs and 401(k) plans, retirement accounts make a juicy target. Some of this money has never been taxed, and under current law never will be.

To maintain this savings incentive the government “spends” $100 billion a year in the form of tax breaks to those who stash money in these kinds of accounts. Now, a new study suggests this tax incentive does little to change saving behavior. Some lawmakers, no doubt, are wondering: Why keep an expensive tax incentive that does not incent?


The portion in bold is just flat wrong. These are tax-deferred accounts, where current contributions are made with pre-tax dollars and are taxed at withdrawal, at the rate for that taxpayer at the time of withdrawal. The money will most certainly be taxed later on, even if it isn't being taxed now.

Moreover, the whole conclusion of the study quoted by this article is directly refuted by the article itself. Let's erroneously assume that the government actually "spends" $100 billion/year (a monumental misconception, to be certain) in deductions for contributions to these types of accounts, which have been around for 30 years or so. The aggregate deductions for retirement accounts obviously hasn't been $100 B/year from their inception to now...in the early years, whatever current revenue may have been forgone by the federal government was no doubt far less than $100 B/year. Yet, there is now a total of $10 trillion dollars held in these accounts today, which is $10 T in capital that would not have existed otherwise.

These accounts, contrary to the article's premise, have accumulated capital far faster and to a far greater extent than if the contributions had been taxed in the year they were made. The very existence of a capital pool in excess of $10 trillion that would not have existed but for the presence of the tax-deferred accounts undercuts the whole premise of the study.

Now, what I would deem to be a clear waste of federal money is any tax dollars thrown at the jacklegs who came to these erroneous conclusions.
37 posted on 11/29/2012 11:44:48 AM PST by Milton Miteybad (I am Jim Thompson. {Really.})
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To: Perdogg

I love the smell of revolution in the morning, it smells like Victory.....sorry for the plagerism.


38 posted on 11/29/2012 11:45:53 AM PST by Mouton (Voting is an opiate of the electorate. Nothing changes no matter who wins..)
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To: Perdogg

here it comes

confiscation

and of course NO spending cuts


39 posted on 11/29/2012 11:47:31 AM PST by GeronL (http://asspos.blogspot.com)
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To: Orange1998

Obama Begins Push to Confiscate IRA’s & 401k’s
http://www.freerepublic.com/focus/news/2960535/posts?page=96


40 posted on 11/29/2012 11:47:56 AM PST by EBH (0bama is guilty of willful neglect of duty.)
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To: Perdogg
Everything including the sacred mortgage deduction is on the table...

I bought a house and never benefited from the "sacred mortgage deduction". I suppose if I had bought out of my range it might have been different, but I wonder how many middle class folks actually save anything with it. I would hazard a guess that they are upper-middle-class and/or spending more than would be prudent.

41 posted on 11/29/2012 11:49:09 AM PST by trebb (Allies no longer trust us. Enemies no longer fear us.)
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To: Orange1998
"The results will make the Great Depression child play."

Perhaps that's the idea.

42 posted on 11/29/2012 11:50:36 AM PST by Joe Brower (The "American People" are no longer capable of self-governance.)
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To: Perdogg

And how many times did the Republicans bring this up before the election?


43 posted on 11/29/2012 11:51:24 AM PST by qam1 (There's been a huge party. All plates and the bottles are empty, all that's left is the bill to pay)
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To: alamogal

There is not enough money to give these people their money back. If everyone rushes to cash out, it could be like the 1939 stock market crash.


44 posted on 11/29/2012 11:52:47 AM PST by GeronL (http://asspos.blogspot.com)
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To: DonaldC

What? And not be able to use the tax code to reward and punish people? NEVER?


45 posted on 11/29/2012 11:52:47 AM PST by Blood of Tyrants (Why is the government more concerned about protecting a microbe on Mars than an unborn baby here?)
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To: AngelesCrestHighway
Yout darned right about that. Civil War and Rev rolled into one.

Election Fraud.....Tax hikes.....Redistribution....I would say that WAR is well overdue. How will we know it has begun?

46 posted on 11/29/2012 11:52:47 AM PST by annieokie
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To: MrB

which one plays the man?


47 posted on 11/29/2012 11:53:53 AM PST by TurboZamboni (Looting the future to bribe the present)
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To: Perdogg

Once again, the government has perpetrated a fraud. They told us to save in tax-free accounts. That was to give us the fruits of our labor in our old age, so that we wouldn’t be dependent.

Ah, but the marxists couldn’t let that last. All that money out there and OUT OF THEIR CONTROL!

Will the few remaining productive people protest and keep this from happening?


48 posted on 11/29/2012 11:54:43 AM PST by I want the USA back (Fascism is wrong even when practiced by the government.)
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To: Perdogg

If 401k accounts are to be frozen, it will probably occur under the pretext of a crisis. But the crisis would have to be a real crisis like a major financial collapse or war. Freezing 401k accunts would likely result in a run by the public on all other accounts including bank accounts, stocks, bonds which would cause a crash and liely a freeze on these accounts as well.
Therefore, if the government is to do something like this, they will need to act suddenly, shut down the internet, censor the media and be ready to impose martial law where needed.
It is more likely that they will try out some very innocous seeming transition to tax deferred treasuries and gradually withdrawal the tax deferred status of 401ks and similar pension plans


49 posted on 11/29/2012 11:54:50 AM PST by grumpygresh (Democrats delenda est; zero sera dans l'enfer bientot)
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To: Candor7
THAT revolt is well overdue RIGHT NOW.

Election Fraud...Tax hikes...Redistrubition...Obamacare.

When does the Revolt begin, and how will we know it started?

50 posted on 11/29/2012 11:56:05 AM PST by annieokie
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