Obama IRAs Could Raise $100 Billion in Five Years (nothing about medical savings accounts)

Financial Planning ^ | 7/08/09

[Libloather]

Obama IRAs Could Raise $100 Billion in Five Years
By Money Management Executive
July 8, 2009

One of President Obama’s proposed financial reforms would require employers that do not offer a 401(k) to automatically enroll their employees into an IRA. If implemented, it would give the biggest boost to the retirement savings industry since the creation of the 401(k) in 1980, enrolling 40 million new investors, and attract more than $100 billion within five years, The Wall Street Journal reports.

It would require companies with 10 or more workers that have been in business for at least two years to participate. It would deduct 3% of workers’ salaries and invest it very conservatively, in inflation-indexed savings bonds, money market mutual funds or stable value funds. Once the portfolio reaches $3,000, it would be moved over to a target-date funds.

Experts estimate that it would cover 40 million of the 75 million Americans who do not have access to a 401(k) or other defined contribution plan. Naturally, they applaud the retirement protection the measure would offer, but they fear that small businesses could balk at the cost of having to hire a payroll service or accountant to manage the IRAs. Others criticize the plan for not investing the money aggressively enough.

[Libloather]

Experts estimate that it would cover 40 million...

There's that number again.

[rfp1234]

...and this will stimulate the economy, HOW?

It will stimulate Zero's Wall St. buddies, or else he wouldn't propose it.

[RockinRight]

I’m all for it!

Oh, but before you do that, eliminate Social(ist) Security first so these employers can put that 6% into it...wait...you won’t do that...?

[KarlInOhio]

So what are the tax rules on these new accounts? Tax deferred now but taxable on withdrawl like 401ks? Will they be vulnerable to the threats of early taxation like the Dems were talking about a few months ago?

invest it very conservatively, in inflation-indexed savings bonds,

Hey, get a 0% return.

money market mutual funds

Oooo, skyrocket up to 0.1% if you're lucky.

[Lets Roll NOW]

In 5 years a 100 billion might buy you a loaf of bread.

[Semperfiwife]

As a small business owner who once offered 401K’s to employees, almost all of those who signed up in the beginning dropped out once they received statements with negative earnings. I was left producing paperwork for 2 employees who saved a total of $15.00 per week. Unless Obama plans on making it mandatory for workers to save, my experience tells me people drop out of these types of plans. They need the extra money when they are making it paycheck to paycheck. And these days more do not even have a paycheck.

[Semperfiwife]

As a small business owner who once offered 401K’s to employees, almost all of those who signed up in the beginning dropped out once they received statements with negative earnings. I was left producing paperwork for 2 employees who saved a total of $15.00 per week. Unless Obama plans on making it mandatory for workers to save, my experience tells me people drop out of these types of plans. They need the extra money when they are making it paycheck to paycheck. And these days more do not even have a paycheck.

[repubpub]

“It would require companies with 10 or more workers that have been in business for at least two years to participate.”

Watch, a lot of these small business’ that have 10 or more will layoff to get down to 9 employees and then hire a bunch of temps.

[Venturer]

There you people go again. Asking pertinent questions Obama doesnt have an answer for.

[Auntie Dem]

I work for a county government run by a democrat mayor and majority democrat council. They just eliminated the county’s 3% contribution to our 401(k) plan because of a budget squeeze caused by 0bama’s economy.

Will The One require his rat buddies to restore our 401(k)?

I didn’t think so.

[BusterBear]

Wasn’t there a proposal a while ago that the government should take over all the IRA money (to “protect” the “naive,” “ignorant” people from the ravages of “greedy” investment managers)?

What a windfall for the government if everyone was forced to have an IRA and then the government took it all over.

[P-Marlowe]

Ok, I've got a copy of the Constitution handy. Where in the Constitution is there a power delegated to the Federal Government to require employers in the various states to offer 401k's or IRA's to their employees?

[Wolfie]

The Constitution? You’re kidding, right? It’s dead, dead, dead. The Feds do what they want.

[11th Commandment]

Again these fascist think they can legislate every problem away. I am a firm believer in saving in 401k’s and encourage owners to set up plans. However, most employees of small business do not participate by choice (get lib would for abortion, but meaningless for economics). To force people to save is nothing more than tyranny.

[Lancey Howard]

LOL, Ubama the scumbag wants to privatize social security through the back door!

[Grampa Dave]

You nailed this proposal:

invest it very conservatively, in inflation-indexed savings bonds, - Hey, get a 0% return.

money market mutual funds - Oooo, skyrocket up to 0.1% if you’re lucky.

We have TIPS in our IRAs as hedges to when the 0b0z0 inflation takes off. There have been Zero/no/nada dividends for a long time.

My wife still has a small sum in Government Money Markets in her John Hancock 401k from her employer, (Since she is over 65, she rolled over 98% of that 401k to her IRA last year). Its return in the last quarter was a minus after the funds management costs were deducted. She keeps contributing to her 401k not for these negative returns, but as a tax shelter re her contributions and the 50% matching contributions from her employer.