discuss confiscating 401(k)s, IRAs
RALEIGH — Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.
Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.
The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.
Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,” blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans” and the “Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.”
Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.
Mandating Equality
Ghilarducci’s plan first appeared in a paper for the Economic Policy Institute: Agenda for Shared Prosperity on Nov. 20, 2007, in which she said GRAs will rescue the flawed American retirement income system (www.sharedprosperity.org/bp204/bp204.pdf).
The current retirement system, Ghilarducci said, “exacerbates income and wealth inequalities” because tax breaks for voluntary retirement accounts are “skewed to the wealthy because it is easier for them to save, and because they receive bigger tax breaks when they do.”
So, now "wealthy" is being defined as those who save money. And, because we are "wealthy", it is ok to take our money away from us.
Honestly, with ideas like that being bandied around in our Congress, why fight the Jihad? If they actually attempt to push this through, it might be time for a new Boston Tea Party.
Maybe we should take all the condos owned by the Congressman apart, piece by piece, and throw them all in the Potomac River.
Ya' with me?
4 comments:
This was one of the big points I told my wife when I said I can not vote for Obama. Of course it takes more than just 1 Obama for this to materialize, but it would represent a huge loss to me and my family.
Going through the numbers using what she has in the pdf doc, here's what I have come up with for myself:
Starting with zero balance, using my current total contribution and achieving 0% gain, it would be worth well over $250k after 30 years.
Using the 5% in the pdf doc and starting with nothing, after the same 30 years at 3%, I'd have around $180k. The $600 tax credit per year would be another $18k, still not enough to cover my current 401(k).
Plus, if I die my wife gets the whole 401(k), but only half the GRA?
Either way, I'm probably working until death anyway.
Ye, gods!
If this happens, we can expect some kind of special tax on the sale of our home. Retirement accounts and one's home are the two big ways to save for retirement.
Hey! They've got to get the money from somewhere. $3+ Trillion from the voting minority looks like a good start. Like they say - when you rob Peter to pay Paul for Mary you always get Paul's vote.
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