Posted on 10/09/2008 11:25:48 PM PDT by Fred
A wide range of sweeping changes to the 401(k) system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans.
Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.
This was suggested by the chairman of the House Committee on Education and Labor.
“With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,” Rep. George Miller, D-Calif., said.
“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings.
With savings rates going down, “what do we have to start to think about in Congress of whether or not we want to continue and invest that $80 billion for a policy that is not generating what we … say it should?” Mr. Miller said.
Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.
When workers collected Social Security, the guaranteed retirement account would pay an inflation-adjusted annuity under her plan.
“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.
That simply results in transferring money from taxed savings accounts to untaxed accounts, she said.
“If we implement automatic [individual retirement accounts] or if we expand the 401(k) system, all we’re doing is adding to this inefficiency,” Ms. Ghilarducci said.
Rep. Robert Andrews, D-N.J., raised the issue of which investment advisers are allowed to offer workers investment advice.
The Department of Labor is considering “loopholes” that would allow advisers to offer “conflicted investment advice if the advisers work for subsidiaries of financial services companies that sell the investments,” he said.
With American workers facing $2 trillion in losses from retirement plans over the past year and Democrats expected to gain seats in the House and the Senate, actions being contemplated by the committee are an important harbinger of what could come out of Congress next year.
Another FOO..Friend of Obama.
Sic Semper Tyrannis.
truly evil
If these clowns get elected - in two years it will be a 70% Republican congress. Trust me. All my freinds, business owners, and myself are pretty much going to fire all employees we can telling people who stay ‘do three jobs or you’re gone too’ it’s real simple - it’s not worth even doing business under this type of environment. Better to do all work myself or just keep powder dry until things open up again and become profitable again (read: republican tax and business policy)
No way will even the media stand for 25% unemployment as thier messiah wrecks the economy.
No, you are probably too young to remember the ESOP program which predated the 401 k. It wasn’t around all that long, but I remember it, because we were not allowed to roll over dividends under the ESOP and when it became a 401K, we were not permitted to roll the dividends, either, because they couldn’t separate the ESOP dividends from the 401K dividends.
“They can’t seize the money that is already there and exchange it for gov’t bonds. They just can’t do that.”
Watch.
That would be like seizing your bank account. What they might do, though, is deduct the amount of SS payment from your 401K.
So, essentially, you get no SS until your 401K is used up.
Sorry, you'll be classified as a money laundering financial terrorist.
I think you would have to give up American citizenship, perhaps Kenya will be doing far better then the USA. Could chose that country...
With employers withholding your pay, it's tough.
I have my own company and can just refuse to withhold and send $$$ to the State (as in Communist "state").
Then wait for the government to put me in jail.
If a few million small companies like mine did this there might be an impact.
Other folks could just claim 19 deductions on their W-4, and on April 15, send zero dollars.
Bottom line... we could put the government out of business (oxymoron).
Heaven help me! This will gut me.
I call BS. There's a ratio requirement between higher & lower paid employees in a group.
http://www.cpas-401k.com/401k-compliance-testing-rules.html
The only reason the rich guy gets more of a tax break, is because his income puts him at a higher tax rate. When they call a reduction in liability an expenditure (note the highlighted word "spend" in the statement above), they're showing their cards. The government owns everything & they give you a gift when they allow you to keep more of what you've earned.
See my previous “underwear” post.
And the “experts” on Fox are predicting the democrats are goign to win a landslide, veto and filibuster proof majority in both houses... if ever there was a year to vote a straight “R” ticket this is it. So many people thought they were teaching some sort of lesson i n2006, but the joke is on those voters... and all of us.
As if those huge "401k tax breaks for the wealthy" have paid off so well for the "wealthy"... Well if that's what the American people want then damn the torpedoes, full steam ahead to oblivion...
I sure wish that drunk Kenyan had chosen to keep his seed back in Africa in the 60's.
The experts on Fox also were positive that cramnesty would pass. The experts on Fox aren’t.
I have a small business. But I’m no business man. So, I messed up and owe a bunch of end-of-the-year taxes. I made too much money. Seems a waste to work so hard to see so much of it just disapear. It will only get worse if Obama gets in. Why can’t these idiots (and the voters) figure it out that raising the taxes on the “rich” is not a way to help the economy?!. Even my dear old Republican mom just the other day said “well, FDR was a Democrat, and he got us out of the Depression...”. 10 minutes later I’m not sure if I changed her views on FDR, but she won’t be voting for Obama.
Anyway, paying my taxes will really put the crunch on me until some of my clients pay (and I hope they still will/can!). And of course I put more money than I should have into my retirement funds without planning on the bigger tax hit. So that money is locked up and/or dissapeared.
I have half-way thought of not paying them. But, not that gutsey - or dishonest. Anyway, I sure don’t want those poor fund managers at Lehmans to have to do without their penthouse suites. (YES - IT MAKES ME MAD TO SHIP OFF XX,XXX dollars to the STUPID GOVERNMENT). I wouldn’t be so mad if they would spend it on perhaps a 500 lb bomb or something - but on a bailout!!?? (Hey, instead of dropping a bunch of cash on Wall Street they could .... oh, nevermind).
Or - perhaps just wait a few more weeks and maybe the gov’t will bail me out too!!?? (Oh, you need to be an illegal buying a $600,000 house with no money down to get help? Oh well.)
Great post.
I just watched the (decent, but flawed) JOHN ADAMS HBO miniseries, and David McCullough said in the documentary included in the set that Adams wished for an American spirit of excellence, and for people to strive for and foster in their children a sense of desire to achieve.
I work in a school, and I am shocked at some of the crap I hear coming from the mouths of teachers with degrees--the kind of people most Americans just assume are smart.
And they're teaching our kids that the government should be there to take care of everyone.
That's the mindset that's on the rise. As Clint Eastwood recently said, a mindset that has voters supporting the candidate who's going to give them something.
What's to become of us if we're all in it to GET something, instead of supporting a government that's there to leave us be--you know, all that freedom and independence stuff?--so WE can do the getting and giving ourselves?
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