"I want to stop the federal subsidy of 401Ks"

[WhiskeyGirl]

The idea is to redirect 401K tax breaks to a new government system of guaranteed retirement accounts into which all US workers would be have to contribute.

Specifically, under Ghilarducci’s plan, the tax breaks on 401K contributions and earnings would be eliminated.

Instead, all workers would get a $600 annual inflation-adjusted subsidy from the U.S. government. The sum would be inflation-indexed. Workers then would be forced to invest 5% of their pay in a guaranteed retirement account administered by the Social Security Administration.

That money in turn would then be invested in government bonds that would pay a teensy 3% a year, adjusted for inflation, less than half the inflation-adjusted 7% return the stock market has delivered.

“I want to stop the federal subsidy of 401Ks,” Ghilarducci has said, adding, “401Ks can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

http://emac.blogs.foxbusiness.com/2008/10/31/beware-of-congresss-threat-to-tax-401ks/

I think of the millions who have used 401Ks to save for retirement...knowing that the money WOULD be taxed in the future.

Now, that successful model is to be replaced by a forced system run by Social Security. 

Who's going to pay for the $600 government contribution?  Where is the money coming from?

I think the money is safer when the individual controls it.  jmho

[Slogger]

While looking for a piece of info on 401Ks, I found this:

YouTube- Barney Frank:  Plenty of rich people that we can tax

http://looneyleft.com/?p=473

covers:

Indication Obama would listen; McCain would not.

Immediate increase in spending.

Deficit fears take a second seat.

Later tax increase

(quick quote)
Personally, I think there are a lot of very rich people whom we can tax down the road and recover some of this money.

[WhiskeyGirl]

New Government Hearse   

There is a new government 'hearse' pulling up to the paychecks of hardworking people.

Why not make Social Security solvent first?  Maybe raise the retirement age again? 

Who can afford to wait until age 75 to retire?  Hmmm...their last three  to five years maybe spent as a door greeter at Walmart, and that is what their retirement will be based on...

Not the last ten or twenty years, but the last three or five, when they are old, ill, find it harder to get a job due to their age, and lost many a good job to the economy...and paid into Social Security at a much higher rate earlier in their life.

How long would a new plan in the good hands of government (Social Security, Congress, & President) remain solvent? 

How long before all the money is lost due to some future ponzi scheme promoted by Congress?  And, by a Congress that turns the other way when reform is needed?

[Slogger]

 

Saturday, October 25, 2008
Democrats Consider Eliminating 401 (k) Tax Breaks

Want a glimpse into what an Obama administration and Democratic-controlled Congress will look at in the area of tax policy? House Democrats are already considering an overhaul of the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

Republicans are throwing around the "socialist" tag all over the campaign trail when referring to Sen. Barack Obama. But if the Democrats are even considering such a radical plan as to seize private pension accounts, it's hard not to look at Democrats in any other way.

James Pethokoukis of U.S. News & World Report wrote on a congressional hearing in the 401(k) matter:

House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should."

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.

http://news-cycle.blogspot.com/2008/10/democrats-consider-eliminating-401-k.html

[nonesuche]

Workers then would be forced to invest 5% of their pay in a guaranteed retirement account administered by the Social Security Administration.

I wish them luck, if they try to do this, they will have to hire staff to garnish many many worker's paychecks - mine included.