Obama's retirement plan proposals - Retirees and workers with 401(k) savings may see changes

South Bend Tribune ^ | 11/09/08 | DAVID PITT

[Libloather]

Obama's retirement plan proposals
Retirees and workers with 401(k) savings may see changes.
By DAVID PITT
Associated Press Writer
November 09. 2008 6:59AM

The election is over and the message is clear — the economy is priority one. The big question now is how some of President-elect Barack Obama's campaign proposals will affect retirees and workers with 401(k) and other retirement accounts. Looking at them a bit closer may reveal some clues.

What are some of the ideas Obama has proposed that could impact my retirement planning?

One issue Obama has endorsed may get serious consideration before he takes the oath of office in January.

Obama proposed a temporary suspension of the required minimum distribution rule, which forces tens of millions of retirees to take money out of their IRA and 401(k) accounts once they turn 70 1/2. The rule is designed to give the government its share of the taxes on the money, which has been accumulating tax free. Failure to take out the money results in a 50 percent penalty assessed by the IRS.

Suspending the mandatory withdrawal would allow people to keep the money in the account and possibly recover some of their losses when the market recovers.

Obama's plan would temporarily waive the penalties and taxes on withdrawals made after age 70 1/2. There's interest in Congress to get it done — sooner rather than later.

The chairman of the House Committee on Education and Labor, Rep. George Miller, D-Calif., has asked Treasury Secretary Henry Paulson to suspend the tax penalty immediately.

AARP, the Washington-based group that represents 39 million people aged 50 and older, also has urged Paulson to take the action right away.

[chainsaw]

It says nothing about eliminating the 401k. It talks about suspending penalties.

It’s not in this thread, but I believe Pelosi has indicted that she wants to increase the value of your 401K to the level it was before the bust,then take your 401K and give you a yearly benefit of 3%.

t does not address what happens to the money when you die. I suspect you heirs get nothing, and the Govmnt keeps the principle to redistribute to the illegals.