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.
“HEY! DOES ANYBODY KNOW STEP 2?”
“STEP 1 COLLECT UNDERPANTS!”
“YEAH BUT WHAT’S STEP 2?!?”
“STEP 3 PROFIT!!!”
Any changes in the law that adversely affect my 401(k) account might seriously tempt me to default on the loan and go live in the mountains.
I'm sorry Jim..but I think both "sides" are in on it. One world companies, one world banks and one world marxists all need nations that are under their thumb for one world governance to be effective.
The bailout shows just how far it has come. The protesters in London can barely be contained....they know.
When this all settles down a bit, I think we might sell our house, cash in the 401k and head for the hills somewhere, too, somewhere off the electric grid, where we don’t have to see another soul, if we don’t want to.
Amazing, isn't it? And it not only belongs to them, they say they spend it!
“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.Dang socialists!
It was one of the "Save The Cute Puppies And Cuddly, Fuzzy Kittens Acts" of 2008. They barred the exits on June 17, 2008 before they lowered the boom on us after they got back from vacation:
The Heroes Earnings Assistance and Relief Tax Act of 2008 (Who could be against it? It's for the troops!)
New "Heroes" Law May Be Villain for Expatriating U.S. Citizens and LPRs Who Surrender Green Cards (02-September-2008)
Let me get this straight.
First, Congressman Miller, a member of the Democratic Socialists of America’s Progressive Caucus, talks about how “we” (meaning Congress) have “invested” $80 billion annually in tax “subsidies” for the “activity” of tax-deferred saving for retirement. And, naturally, given recent events, this must be reconsidered.
And so the tax deferment finds its neck on the chopping block of the Democrat Congress.
But of course the benevolent Democrats could consider a new option to trade those beleaguered 401k accounts for shiny new “guaranteed” government retirement accounts!
Yes, the same people who thought it was just peachy to shovel millions of six-figure mortgages to illegal aliens without documented income (cf. http://kfyi.com/pages/local_news.html?feed=118695&article=4364653) and millions more mortgages to millions more uncreditworthy folks on the basis of ethnicity, the same people who blocked a dozen Bush Administration attempts to bring Fannie and Freddie to heel, the same people who call any reference to larcenous Obama advisors Franklin Raines or Jim Johnson “racist”, the same people... well, the same people who put us in this mess... the $700 billion of emergency liquidity is not enough for them.
Consider:
The 401k tax deferment is one of only two major deductions left for most middle- and upper-middle-class taxpayers.
The other is the home mortgage deduction.
Will homeownership be the next to go, then? Congressman Miller, how much is Congress investing to subsidize THAT activity?
And, though I’m not into tinfoil-hattery, I must admit: if the intention was to grab the trillions of Americans’ private wealth and savings and soften up the population to accept a thunderclap socialist takeover in broad daylight, this all could not have been better scripted.
Well said.
Oh, that’s if you renounce citizenship. I’d never do that. I knew about that one.
Why should my tax dollars subsidize someone else’s 401(k) plan?
Unlike liberals - and unlike most conservatives - I take a third view of tax breaks.
Tax breaks do not represent a loss to government (contrary to what liberals believe), but to other taxpayers who do not get the tax breaks. Everyone should be able to enjoy one low flat tax rate, but with tax breaks only the favored get the low tax rate.
For a better idea of where I’m coming from, see
http://redclaycitizen.typepad.com/redclay/2008/07/tax-holiday-wee.html
Ordinarily I would say that “letting” workers trade their 401(k) assets etc creates an additional option and is therefore a good thing.
But with these people, you have to look ahead to anticipate where they are headed - and cut them off at the pass.
How soon will be be before “letting” workers convert their 401(k) assets into government bonds turns into FORCING them to convert?
I don’t have a 401(k) but I smell a Rat. No thanks!
The institution of the IRA and the 401(k) was an amazing bit of sanity, considering that it was started when the Democrats were in control of Congress. It has the effect of a savings plan for the government - the government defers taking the tax, and therefore receives the tax on the income when the taxpayer is retired and is collecting Social Security. Consequently the tax paid by the taxpayer on his 401(k) realized taxable income helps defray the cost of the retired taxpayer's Social Security.It's not enough to cover the unfunded liability represented by the so-called "Social Security Trust Fund" (which is nothing actually but a record of how much money the government took on the pretext of saving for future Social Security liability, but which the government in fact actually spent), but it is at least an increment in that direction which is at least in the same order of magnitude with that liability.
So the tax deferral savings plans are atypically responsible policy for a Democrat/ACORN influenced government to be doing - and it should therefore be entirely unsurprising that the Democrats are talking about gutting it.
BTTT
We ain't seen nothing yet!
Is it any wonder the market is in a tailspin?
BTTT
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