Who's confiscating your 401(k) and IRA?

[WhiskeyGirl]

This shocking pronouncement is certainly an attention grabber, which if even partially true, would have an impact on nearly every employed and retired American. The basis for the report is testimony before the House Committee on Education and Labor in early October.

What other suggestions were there?

Dr. Ghilarducci has presented a socialist solution to a problem that could easily be dealt with using rudimentary controls that would limit the amount of risk allowed inside these tax deferred savings devices. She also ignores the fact that most self-directed money lies in voluntary, privately sponsored, employee benefit programs--- emphasis on voluntary and private.

Self-directed retirement accounts could be controlled as to content and asset allocation to: 1) assure that a reasonable proportion of all accounts are guaranteed as to principal and interest, and 2) preclude ownership of high-risk securities.

I'm not sure that the good doctor grasps the distinction between a self-directed, defined-contribution, investment plan and a guaranteed, defined-benefit, pension plan. Most plan participants are led to believe that the former is just as secure as the latter. Sorry, Charlie.

Was the loss of 401K monies different for those in high return investments as compared to those in lower return, safer options?  I have to believe that SOME didn't lose that much.

...Dr. Ghilarducci visualizes all your no-longer-self-directed money finding a new home in the Social Security Administration's toy chest--- thus transforming a behemoth bureaucracy into an investment management giant! This is just too alarming for words---

How long would it take the government to go through $10 trillion in 401k/IRA money?  Who's going to bailout the GRA?  Social Security?

But, what if, instead of a Guaranteed Retirement Account, we adopted a whole new system based on the SSRIA? (Google it.)

http://www.marketoracle.co.uk/Article7303.html

[WhiskeyGirl]

What happened to all that money in your IRA or 401K?  Were you feeling secure at one time, thinking retirement looked good?

Here is what will continue to be wrong with investing in the stock market (not all companies, but enough that it will continue to be scary) -

Appeals court hears brief on corporate liability
Fri Nov 21, 2008

NEW YORK (Reuters) - A lawyer argued on Friday that an appeals court should change legal standards so corporations are not easily held criminally liable for the actions of employees who break company regulations.

Former federal prosecutor and now defense lawyer Andrew Weissmann made his case in the 2nd U.S. Circuit Court of Appeals in New York in support of Ionia Management S.A. of Piraeus, Greece, a ship management company convicted in Connecticut last year of illegal dumping of oily water at sea.

In the appeal, known as a friend of the court brief on behalf of six business groups and bar associations, Weissmann said the standard for corporate criminal liability was too low for companies that have compliance programs for their employees.

http://www.reuters.com/article/domesticNews/idUSTRE4AK7SR20081121?pageNumber=1&virtualBrandChannel=0

Why not focus on doing the right thing?  Insisting on honesty and integrity from employees?

Shouldn't companies fear negative consequences?  Shouldn't management be held accountable for the actions of employees?  Actions that they do have control over? 

I remember a time when companies were concerned with negative consequences, they educated themselves and made it clear to everyone were the buck stopped, what behavior was appropriate and what behavior was not appropriate, and made sure everyone knew and why.

What exists today?  "I don't know what my employees are doing and why."  Why not?  How do you earn your salary and benefits and bonuses?  What IS the company paying you for?

Can anyone own enough stock through their retirement investments to ever keep a company honest?  Doing the right thing?  Keep on top of things?

Can one drop of water, isolated for the rest of the bucket really contribute?

What is corporate America doing to restore confidence?  Nothing that I've seen.  Looking for handouts. 

just my humble opinions

[WhiskeyGirl]

Is my $1 billion dollar personal bailout check in the mail yet?

[jjayinthemorning]

Yeah, I want my bailout check too!!!

[WhiskeyGirl]

Allow me to quote a couple of choice lines from the Times piece, by Mary Williams Walsh and Tara Siegel Bernard:

To many retirement policy specialists, the lost contributions are one more sign of America's failure as a society to face up to the graying of the population and the profound economic forces it will unleash. Traditional pensions are disappearing, and Washington has yet to ensure that Social Security will remain solvent as baby boomers retire and more workers are needed to support each retiree.

They in turn cite Theresa Ghilarducci, New School economist, who frames the issue this way: "We have had a 30-year experiment with requiring workers to be more responsible for saving and investing for their retirement. It has been a grand experiment, and it has failed."

There's just one thing wrong with Ghilarducci's take, which is that we never, in any way, required workers to be more responsible for their own retirement. What "we" did, more precisely, was offer the mild suggestion that workers salt something away, while in the meantime cutting the ground out from under them by abandoning defined pension plans and by raiding the Social Security trust fund repeatedly. And while also sending workers the much louder message that living is all about spending, not saving.

We could contrast our utter carelessness in this regard with the German way, in which an already-strong national savings ethic is reinforced, not mocked, by government actions.

Maybe the nation will be able to 'spend' itself out of the retirement dilema?  Why doesn't the government/new administration encourage saving?  Living within the financial means of the individual, family, and nation? 

Especially so when we take a peek under the TARP, and the AP did yesterday, to find that the stockings of the some 600 top bankers bailed out with our tax dollars have been very well stuffed indeed. HuffPo already bannered this story, featuring the special blessings showered upon Merrill's John Thain, so I needn't repeat any of it. But it is stomach-turning to see how the looting continues and how all the fulminating of Barney Frank and others won't make the slightest difference.

Anyone following the money?  Anyone standing up for the nation?  Taxpayers?  Workers?  Future generations?

So it's "Ho, Ho, Ho!" for the bankers and other assorted thieves this Christmas -- and it's "Woe, Woe, Woe!" for the poor working stiffs.

The reckoning has arrived, and my own holiday prayer is that the real wealth producers in this country will finally get sufficiently riled up to rise up against the peculators who have picked their pockets in the course of a not-so-grand experiment in social atomization.

Who has profited from the bailouts and the financial instability?  Workers?  Bankers?  Members of Congress?  Lobbyists?  Global carpetbaggers?  Speculators?

http://www.boston.com/news/nation/washington/articles/2008/12/26/health_reform_a_joint_mission/

jmho

[WhiskeyGirl]

How long before your retirement savings are tapped by the Obamacrats?  How long before your dollars are worthless?

Posted by semianon
November 02, 2008, 9:46AM
In case you missed it, House Democrats have had hearings recently on the idea of ending the practice that allows taxpayers to fund their 401(k) with pre-tax contributions, thereby ending the ability of taxpayers to defer taxes on that portion of their income that they contribute to their 401(k). House Democrats are considering ending what the article calls a "tax break". In its place, Democrats are talking about mandating that workers put 5% of their income into a newly created account at the Social Security Administration and that those contributions would buy government bonds with a guaranteed rate of return of 3%.


A copy of an article about this proposal can be found below but first a few points about this proposal:


(1) Ending the current tax treatment on retirement savings is a very bad idea. Ending this treatment would impose at least an $80 billion annual tax increase on 401(k) participants which would very likely reduce the amount Americans put away for retirement. With lower savings, Americans will have less for retirement. It is also important to keep in mind that 401(k) plans do not allow people to avoid taxes on that income altogether but rather to defer taxes until money is taken out of the 401(k) upon retirement, at which point the retiree pays taxes not only on the original contributions but also on all of the gains earned by the original contributions.


(2) One of the witnesses the Democrats had testify on this issue, Theresa Ghilarducci, is a professor at the very liberal "The New School for Social Research in New York." Professor Ghilarducci stated in a New York Times article (see here) that with this tax increase "the federal government could save at least $80 billion." Accordingly, one must conclude that the Professor and Democrats who support the proposal must believe that the salary of American workers, including money workers put away towards retirement, belongs to the government unless and until the government acquiesces to allow an American to do something else with the wages. How else could someone describe taxing tax deferred retirement savings as "saving" to the government?


(3) This proposal would also take the $80 billion tax increase on a worker's wages to fund a $600 government contribution to each worker. This is another indication of the redistributive policies the Democrats favor and it must be the kind of things that Senator Obama has in mind when he talks about "sharing the wealth." I would point out that by spending the 401(k) related tax increase this plan does not actually "save money" and that this plan is actually a typical "tax and spend" plan that Democrats have been advocating for years and years.


(4) American workers already pay a tax of 6.2% on their wages into the social security system and their employers pay the same tax on behalf of each employee (the self-employed pay the tax as both employer and employee). Economists state that the employer's share is actually paid by the employee because if the employer did not have to pay the tax, the worker would get the employer's withholding paid as wages. Accordingly, workers are already paying a very high tax rate, effectively 12.4% of their income, into social security under current law. The 5% mandatory charge in this proposal is nothing more than another payroll tax (in addition to the SS tax outlined above, employees and employers also each pay a 1.45% tax on all of the employees income, like SS, the self-employed pay both the employer and employee shares). So this proposal has two tax increases in it: (1) the $80 billion tax increase by eliminating the deferment on 401(k) contributions; and (2) the 5% payroll tax (which would be a HUGE amount).


(5) Unlike a 401(k) plan, the Democrats' proposed tax is not voluntary, it will be mandatory mandatory. This proposal is basically the same as if the Democrats were proposing to increase the SS withholding taxes on each worker. As such, this proposal will: (1) generate a MASSIVE TAX INCREASE for American workers; (2) reduce the economic freedom of American workers; and (3) significantly reduce the disposable income of American families at a time when they can least afford it.


(6) In addition, the taxes will be used to fund a "guaranteed" social security account. This is NOT a personal account where the taxpayer is in total control of their retirement savings. Rather, according to Professor Ghilarducci: "The government would pool the proceeds from all the accounts" into a single account. Accordingly, not only is this proposal a giant tax increase but would operate much like the current social security system. As a result, this plan could be the largest entitlement program ever created.


(7) It is worth keeping in mind that this proposal would basically take the current fiscal hole that the social security system has and force every American worker to put all their retirement eggs in that single basket. This proposal offers no more security for today's younger workers than the current system offers them. People who are working and in their 20s and 30s today do not believe social security will be there for them when they retire. It makes no sense to take away the control workers enjoy over their retirement dollars today and instead put them their money into Washington run a social security plan that probably won't be there for them when they retire. Today's younger workers deserve better.


( Finally, advocates of the proposal state that they are motivated by the concern that 401(k) plans have seen "volatility" and are therefore more risky. Advocates will try to suggest that the current 401(k) system needs to be replaced with this proposal for security reasons. Republicans should talk about ways to offer more choices to 401(k) participants similar to the choice that exists for TSP participants. In the TSP, there is a "Lifecycle Fund" which reduces investor risk by allowing TSP investors to elect to invest in a fund that gradually rolls participants from the stock market to bonds as they near retirement. This is an option that is available to Members of Congress in their retirement plan. Don't the American people deserve a similar option short of basically ending the availability of 401(k) plans.


The New School is a very liberal organization. One of its board members, John L. Tishman and several of his family members have maxed out campaign contributions to a number of Democratic Senate challengers this year including to Mark Udall (CO), Tom Udall (NM), Al Franken (MN), Jeff Merkley (OR), Tom Allen (ME), Scott Kleeb (NE), Mark Begich (AK) and Jeanne Shaheen (NH). In addition, several members of the Tishman family have contributed $28,500 each to the DSCC.


Accordingly, it appears as if The New School is not only advocating: (1) doing away with personal 401(k) plans; (2) reducing the savings of Americans; (3) increasing taxes on Americans workers in two ways; (4) proposing a massive entitlement program; and (5) placing government in total control of workers retirement plans, but The New School is associated with people who are funding the 2008 election specifically of people who will be willing to enact their extreme left-wing agenda.

http://blog.cleveland.com/openers/2008/10/mccain_suggests_democrats_will.html

If you took all workers 55 and older out of the workplace, would that end unemployment?

Theresa G. has talked a lot about 'saving' older Americans from work and their retirement nest eggs.  For some reason, they think that there needs to be one BORG plan like failed Social Security.

Individuals may be successful and save.

Governments spend, waste, and squander resources, and government can't do a better job for everyone.  There is no government discipline.

Washington has failed Social Security and Medicare.  Jobs are disappearing and there is no prosperity coming from the Obama administration.

my opinions.

[WhiskeyGirl]

"We were warned"

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

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.

In a radio interview with Kirby Wilbur in Seattle on Oct. 27, 2008, Ghilarducci explained that her proposal doesn’t eliminate the tax breaks; rather, “I’m just rearranging the tax breaks that are available now for 401(k)s and spreading — spreading the wealth.”

All workers would have five percent of their annual pay deducted from their paychecks and deposited to the GRA. They would continue to pay Social Security and Medicare taxes, as would employers. The GRA contribution would be shared equally by the worker and the employee. Employers no longer would be able to write off their contributions. Any capital gains would be taxable year-on-year.

Recently Herb Kohl, Democrat, Wis., Chairman of the Senate special Committee on Aging, is beginning to draft a law that would discourage people from dipping into their 401(Ks) before they retire. One has to wonder why or how a Democrat has the power to take away your life savings. Herb, I have an idea, while you socialist's are raiding the taxpayers to help the rich banks, Goldman, J.P. Morgan, AIG, GM, etc. just a few strokes of the keyboard would eradicate all Americans’ mortgage debt. Then we would not have to borrow from our retirement accounts and the cost would be fractional compared to the bailout.

The new stimulus would also fund the banks. After all, you changed the rules for the banks, [i.e. mark to market]. I think the Democrats will do it. The last act of those in power in a collapsing empire is to loot the treasury. What better way than to steal the last savings of the middle class?

A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and he carries his banners openly. But the traitor moves among those within the gate freely, his sly whispers rustling through all the galleys, heard in the very hall of government itself. For the traitor appears not a traitor - he speaks in the accents familiar to his victims, and wears their face and their garment, and he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation - he works secretly and unknown in the night to undermine the pillars of a city - he infects the body politic so that it can no longer resist. A murderer is less to be feared. - Cicero, 42 B.C.

Jeff Henry

Rockwood

http://www.dailyamerican.com/articles/2009/11/20/opinion/letters_to_editor/letter202.txt

Why should any politician be rearranging the rewards of hard labor?

If someone works hard and has two jobs to get ahead, what moral or ethnical right to politicians have to take that money and give it to those that choose not to work?

jmho