The Grudge Match Over Your 401(k)

WSJ ^ | 4/17/10 | ELEANOR LAISE

[Daisyjane69]

Attention, workers: A battle is brewing over your 401(k).

A number of people who are changing jobs, being laid off or retiring are finding themselves in a tug-of-war between their former employers and investment firms eager to win their business. At stake: almost $400 billion of assets in 401(k)s and similar retirement plans that are eligible to be rolled over into other vehicles this year, according to Allianz SE's Pacific Investment Management Co., or Pimco.

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David Walter Banks for The Wall Street Journal

Chris Green, formerly of the Miami Dolphins (below), at his home office. The National Football League refuses to relinquish control of his 401(k) until he reaches age 45. . Getty Images ..When an employee leaves a job, he or she is generally free to roll over certain retirement accounts like a 401(k) into an individual retirement account. But many employers, for the first time, are trying to hang on to their 401(k) participants.

[Daisyjane69]

I did a search before posting, and it doesn't appear that this has been posted.

[The Working Man]

A pretty good article. It falls in line with what I have been seeing for some time now.

I still believe though that we will see in the near future, (within a year), the concerted effort of the Federal Government appropriating all of the 401K’s. There is just too darn much money sitting there.

And it is my belief that the bi-weekly influx of money from our paychecks into the 401K’s and passed on into the stock and bond markets are a driving force in the continuing strength of Wall Street.

The Government wants that money in their hands and under their total control. I just wonder how hard the Wall Street types are going to fight to keep that money flowing into the financial system that they are the heads of?

Of course the real loser is the person who just wants to prepare for their retirement and is willing to fund it their self.

[Reagan69]

You just know Nancy is exploring ways to get OUR money.

I stopped contributing. We are in the highest tax bracket. I am going to use the money I normally contribute (the max allowed) to donate to conservative candidates this year.

If the dems remain in power, I don’t want the money in a bank (401K account) for them to take. If they lose power in NOV... it will be one of the best investments I will have ever made.

[Yo-Yo]

I still believe though that we will see in the near future, (within a year), the concerted effort of the Federal Government appropriating all of the 401K’s. There is just too darn much money sitting there.

I agree that the government will try to grab the money for some sort of "Social Security II" program, but they will be in for a nasty surprise if they do.

The problem is that my guess for the reason why in this article companies are trying desparately to pursuade former employees to keep their 401Ks with them is because the company owes matching funds on those accounts. In many cases I bet they haven't really made those payments, they've just pulled the same trick the government does with your SS fund contributions - they just filled the account with IOUs.

When someone closes their 401K account to roll over into an IRA, the company then has to cough up hard cash. If this is true, we're going to find the same problem if the government tries to sieze all 401Ks. The matching funds are not there, and corporations will go bankrupt trying to meet that mass obligation.

Or not.

[The Working Man]

Now that is something I hadn’t even considered. No real money just IOU’s. Hmmmm, There is a kind of twisted logic there, isn’t there?

And if memory serves me correctly, hasn’t some of our major corporations done this before with their regular pension funds, underfunding them I mean?

[taildragger]

Brilliant observation. The caviat is it usually takes a five year vesting period for the matching to kick in.

With employees moving around more these days, I am curious is it the ones staying just over the 5 year mark and leaving that are causing the heartburn?

[prairiebreeze]

HERE is the link for submitting public comments to Labor Dept, IRS

Deadline is May 3rd.

What the gubmint ultimely wants to do is turn these into Government Regirement Accounts offering or mandating low risk - low reward annuity and similar products and administer it via....tada...Social Security.

Government Plans to Loot Your Retirement Account

[The Working Man]

It’s amazing! I went to the first link for the Labor Dept. I started to read the document and my eyes just glazed over.

[GreatMan]

Ping

[4buttons]

"I still believe though that we will see in the near future, (within a year),
the concerted effort of the Federal Government appropriating all of the 401K’s"

Two words- Teresa Ghilarducci:

"The 401(k) is a failed experiment of how well individuals can
save for their retirement in commercial individual accounts. Instead, we
need a supplement to Social Security that competes with the 401(k) — what I like to call a “guaranteed retirement account” plan to which
all workers and employers would contribute 2.5 percent."

And-

googled

[The Working Man]

I remember her and her idea for GIRA.

I do think that it is just another way of stealing from the “working man”, LOL. :=)

I can see some politician just sitting back in his cushy office and saying:

WOW, all that money... If we could just make them buy Treasury bonds we could avoid having to raise taxes this month.

Yeah, right...

[EVO X]

The caviat is it usually takes a five year vesting period for the matching to kick in.

It looks to me if they decide to do matching, then they have to do it by the end of the plan year. They get tax deductions for making matches. Not sure how that is treated if someone leaves before being fully vested..

[Jackson57]

So basically, since the Social Security system is getting ready to implode they’re wanting to recreate it in the Guaranteed Retirement Accounts? The government has done such a poor job of administering SS and anticipating the level of demand on the system that they think they should be able have a great big “do over” in another system.