Eyeing Your Pension: Are 401(k)s safe from congressional Democrats? (They want it ALL!)

WSJ ^ | 10/23/08 | JAMES TARANTO

[Libloather]

Eyeing Your Pension Are 401(k)s safe from congressional Democrats?
By JAMES TARANTO
OCTOBER 23, 2008

If you have a 401(k) or equivalent retirement plan, you've probably been watching nervously the past few weeks as your nest egg has shrunken owing to the current turmoil in the markets.

Well, it could be worse. But don't take heart, for what we mean is it could get worse. The market turmoil has some politicians on Capitol Hill eyeing the end of the 401(k) as we know it. Workforce Management reports on a hearing of the House Education and Labor Committee earlier this month:

SNIP**

Sounds pretty unappealing, doesn't it? But in her congressional testimony, Ghilarducci offered a sweetener:

Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap. . . .How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security.A 55-year-old who lost 20% of his 401(k) because of the recent stock market decline was investing more aggressively than he should have, given his age. Ghilarducci proposes to reward this imprudence in exchange for dramatically limiting everyone's ability to take risks (and enjoy the corresponding rewards) and for greatly increasing government control of Americans' retirement funds.

It is by no means a certainty that Congress or a President Obama would embrace such a proposal, but this is a direction in which things may move if the Democrats make big gains next month.

[rawhide]

In addition, workers would be able to pass on only half of their account balances to their heirs; presumably the government would seize the remaining half. (Under current law, 401(k) balances are fully heritable, although they are subject to the income tax.)

Scary, isn't it? Obama must go down in defeat. This is only the beginning.

[KeyesPlease]

If I understand correctly, the government will allow you to give it your 401(k) in exchange for an enhanced Social Security benefit - which, presumably, wouldn’t be inheritable by your heirs.

Wouldn’t that create a moral hazard in a socialized medicine environment?

[kesg]

Another issue McCain should grab with both hands and run with it. Big time.

I couldn't agree more. I would add only that Sarah Palin should do this. She will be able to explain the problem in a first-handed way that will be much more persuasive.

[Bobalu]

Boyle’s Observation
A welfare state is one that assumes responsibility for the health, happiness, and general well being of all its citizens except the taxpayers.

[the_Watchman]

Note that your non-401K and non-IRA investments just took a big tumble in the market during the last 7 months. We expect them to recover, but it will probably take a couple of years. Do you really want those “gains” to be subject to capital gains taxes which are doubled?

[cajungirl]

When you take money out of 401K, it is taxed as income not gains. You can take neither gains nor losses.

But that could all change under zero

[xkaydet65]

Okay, this is indefensible, but when I first read this yesterday the implication was that the 401Ks would remain the property of the holder, just no longer tax exempt. They would become ordinary taxable investments. I saw nothing that would indicate the Dems are planning on seizing 4 trillion dollars in private assets. Unless there is some absolutely undeniable source of this accusation we should stick to the particulars which are bad enough. The loss to the financial markets of future 401K funds will be a factor in prolonging this recession into infinity.

[DeLaine]

It’s no “sweetener” to have the government take my money.

[WellyP]

I know several great places OFFSHORE where I can go and live......and I WILL take my money with me!

[cajungirl]

THe 401Ks are heritable and if the spouse or kids who inherit roll them into survivor accounts, they avoid taxes until they withdraw them.

I think not only do they want the funds but they will determine what your fair income is.

My question is willl they confiscate funds of people alreeady retired?

[cajungirl]

I saw the article that there were hearings on this weeks ago and that the dept of labor was involved and there would be a voluntary surrender of accounts in exchange for a govt pension,,the govt would “manage” our funds.

[poindexter]

Teaparty.

[Frantzie]

Yeah usually overnight in Tokyo buying options to prop up markets overnight.

I am think Soros, Rham Emmanuel and others are doing the opposite now to drive the markets down. Asia and Europe were destroyed last night and we went down but came up a bit. They are pulling out every stop to try to beat McCain. Limbaugh today made a minor allusion to market manipulation today. He said more was coming on that soon.???? I not sure what that was about. ???

[Swing_Thought]

You gotta give ‘em credit. They’re creative, these thieves.

[rlmorel]

[ridesthemiles]

Another issue McCain should grab with both hands and run with it. Big time.”

Agreed.

Argentina seized almost $30 BILLION in PRIVATE pension funds this week. That’s right— I said SEIZED.

[ridesthemiles]

is this proposal for an optional or mandatory system?””

With the Democrats in charge- what do you think????

[rlmorel]

ME: What happen?

CONSERVATIVES: Somebody set up us the anal exam.

YOU: We get rubber glove.

ME: What!

YOU: Computer screen turn on.

CONSERVATIVES: It’s you!!

LIBERALS: How are you gentlemen!!

LIBERALS: All your 401K’s are belong to us.

[cgk]

Where? And are the child-friendly?

[jersey117]

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