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Author Topic: Obama / Geithner Eyeball your 401K and IRA (cont.)  (Read 3976 times)
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WhiskeyGirl
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« on: April 13, 2010, 07:49:17 AM »

Quote
Tuesday, January 12, 2010
Converting 401k and IRA Funds Into "Steady Payment Streams"

Last May, I wrote about the rumor that the Obama administration might seize funds from American's 401k and IRA accounts.

Last week, Bloomberg pointed out:

    The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.

    The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

    There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.

    In addition to annuities, the inquiry will cover other approaches to guaranteeing income, including longevity insurance that would provide an income stream for retirees living beyond a certain age, she said.

    “There’s been a fair amount of discussion in the literature taking the view that perhaps there ought to be more lifetime income,” Iwry, a senior adviser to Treasury Secretary Timothy Geithner, said in an interview...

    One proposal raised by Iwry as co-author of a paper while at the Retirement Security Project, before joining the administration, has reached Congress. A bill requiring employers to report 401(k) savings both as an account balance and as a stream of income based on an annuity was introduced on Dec. 3 by Senators Jeff Bingaman, a New Mexico Democrat, Johnny Isakson, a Georgia Republican, and Herb Kohl, a Wisconsin Democrat.

Sounds innocuous, right?

Maybe.

But Karl Denninger and Jesse smell a rat.

Denninger writes:

    In a short conversation this noontime ... Rick Santelli was talking about a potential to effectively force money into the Treasury market.

    Where would they get this?

    From your 401k and IRA accounts!...

    Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!

    Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!

    Guess what? They'll do that here too - you're going to "invest" in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.

    The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!

    What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI - the "inflation index" - as they have for the last 30 years) so as to guarantee that you lose over time compared to actual purchasing power...

    "Choices" have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market - so they will effectively tax you by forcing your "retirement" money to buy them!

    This may be the only way for Treasury to hold down interest rates to something reasonable in the intermediate term, but doing so will instantaneously remove a major source of funding for the stock market - that is, the monthly and quarterly inflows from retirement accounts.

    You can bet this won't be good for you, the ordinary American.


    You can also bet that once such an "option" is made available there is a very high probability of the government doing things that either promote or simply don't stand in the way of another stock market crash as a means of "herding" your money into Treasuries - so they can blow it - all under the guise of being allegedly "safe".

    Of course this begs the question - what if the government can't pay down the road when you retire, just as they can't pay on a forward basis with Social Security and Medicare?

    This "proposal" can only mean one thing - Treasury smells smoke. Maybe you should pay attention to what they're huffing!

    And before you say "oh they'd never do that" I want you to read this:

        Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

(snip)

more here - http://www.georgewashington2.blogspot.com/2010/01/flashback-will-obama-seize-americans.html

All these schemes seem to involve taking your retirement savings, (I don't hear anyone complaining about the losses) and putting them in a government controlled fund. 

Government will now control your healthcare and esentially decide when you die due to lack of care.

The Government Savings Accounted promoted in the past paid like 3% interest and in the end, you didn't get all your money, you could not leave it to family, friends, or dispose of it as you chose when you tie. 

Like Social Security, the GSA, and I would imagine the 'annuity' would pay a lot to people what have contributed little or nothing. 

Social Security started for retirees and now includes the disabled.  Those who pay in can't collect until they are on deaths door, and other due to real or imagined disability collect for years.  What's wrong with this picture?

Contrast this with Geithner's EU battle over American hedge fund and bank access to the financial markets in the EU. 

No jobs, no retirement, no property for Americans.  Hedge funds need capital and they want to gamble away what little some may have left.  It's for the greater good.

my opinions.
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WhiskeyGirl
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« Reply #1 on: April 13, 2010, 08:00:22 AM »

Quote
Officials discuss difficulties of annuitizing 401(k)s

(snip)

J. Mark Iwry, senior adviser to the Treasury Secretary Timothy Geithner, and Michael L. Davis, deputy assistant secretary for the Labor Department’s Employee Benefits Security Administration, today spoke at MetLife Inc.’s sixth annual benefits symposium in Washington. During the panel they hosted, “From Policy to Practice — Key Health Care and Retirement Agendas of the Current Administration,” they discussed some key legislative changes that will effect retirement planning, and asked audience members for input on integrating annuities into defined-contribution plans.

“The translation from the [retirement] account balance to income stream is something people aren’t good at,” Mr. Iwry said. “People are unrealistic about how long they’ll live.”

The use of annuities in retirement plans is just one of the concepts public officials have been kicking around. Currently, the Labor and Treasury departments have issued a request for public comments on incorporating lifetime income options into employers’ plans. The deadline for submissions is May 3.

(snip)

Indicators suggest employees want an annuity option in their defined-contribution plan: MetLife’s study of employee benefits trends, which surveyed about 1,500 employers and 1,300 employees, showed that 44% of workers would like an annuity option as part of their 401(k), 403(b) or 457 plan. But only 10% of employers say they’re “very interested” in providing that choice.

(snip)

And though many workers say they want an annuity option, Mr. Iwry noted that in situations when workers can choose between a lump sum and an annuitization of their defined-benefit plan, they tend to take the lump sum.

(snip)

Mr. Iwry asked the audience to weigh whether it would be helpful to accommodate a deferred annuity — specifically, longevity insurance — under the required minimum distribution rules. This way, participants can begin receiving income either when they hit life expectancy or at an advanced age as a way to protect against outliving assets.

“It’s a way to protect yourself against the tail risk of longevity,” Mr. Iwry said. “An annuity that starts at that age — even if it doesn’t pay anything until you get there — demands less of your account balance now.”

more here - http://www.investmentnews.com/article/20100412/FREE/100419989

Wasn't Social Security set up as insurance against old age?  Outliving your savings?  What kind of condition is Social Security in these days?

Anyone think all your savings will be there after Obama/Geithner/unions get their hands on it?
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It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #2 on: April 13, 2010, 08:08:59 AM »

Quote
Treasury official quiet on White House role in funding debate

A top Treasury Department executive on Monday was mum on whether the Obama administration will intervene in a dispute among House Democrats that has stymied funding relief legislation for defined benefit plan sponsors.

“We (Obama administration executives) are in favor of getting legislation enacted promptly to provide targeted relief,” J. Mark Iwry, deputy assistant Treasury secretary for retirement and health policy, said at a conference hosted by MetLife in Washington. However, Mr. Iwry would not say whether the administration will provide further guidance to House Democrats on what to include in the legislation.

Quote
Mr. Iwry said the targeted relief that the administration supports would limit relief to the DB plan sponsors that really need relief, but he declined to provide any additional details.

House Democrats have been unable to agree on what provisions to include in the legislation to provide funding relief. Lobbyists for pension funds want the Obama administration to take its own position on the various legislative proposals.

Quote
Also at the MetLife conference, Michael Davis, deputy assistant secretary of labor for the Employee Benefits Security Administration, said the DOL would issue additional guidance soon on what questions defined contribution plan fiduciaries should be asking before deciding which target-date funds to offer in their plans and what sorts of information plan sponsors should be giving participants about those funds.

“We’re very close,” Mr. Davis said.

more here - http://www.pionline.com/article/20100412/DAILYREG/100419989

More union bailouts?

The 'reinsurance' passthrough wasn't enough?

Why can't the union pensions go through the same process as other businesses/workers when they lose their pension? When pensions convert to a 401K or IRA?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #3 on: April 13, 2010, 08:19:16 AM »

Quote
Mr Brogden said the introduction of a compulsory government annuity system could seriously shake Australians' confidence in super and discourage them from putting any more than the compulsory 9 per cent in.

"Such an annuity scheme will strongly discourage voluntary contributions into superannuation due to the harsh restrictions imposed on how those savings can be accessed in retirement," Mr Brogden said. And he believes the temptation for the government to spend the money and then tax to get it back is high.

Mr Brogden said actuaries Towers Watson had completed independent research for IFSA that demonstrated that some options being considered to manage the cost of an ageing population may be significantly unfair.

Richard Howes, chief executive of Challenger Life, the largest provider of annuities in Australia, also considers the provision of annuities by the government to be fraught with risk.

"Particularly if (the government) were the sole provider and only offered one rate," he said.

"The private sector can better price annuities to match actual risk, benefiting manual workers and others with lower life-expectancies."

more here - http://www.theaustralian.com.au/business/super-sector-comes-out-against-a-government-annuity-scheme/story-e6frg8zx-1225851579242

In the US, Obama is already spending the money, and it is being squandered.  I think the goal was to seize the $14 trillion.  During the campaign, so many 'trial balloons' about Government Savings Accounts.

Already pay into Social Security and Medicare, no fund / no trust...

Already pay into alternative retirement...

And now the government wants that too?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
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WhiskeyGirl
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« Reply #4 on: April 13, 2010, 08:29:52 AM »

Quote
Health care legislation contains tax on annuities

President Barack Obama has promoted annuities as an effective tool for retirement savings. But a little-noticed tax in the health care reconciliation bill imposes a 3.8 percent tax on annuities purchased by high-income earners.

The tax, which goes into effect in 2013, will cost consumers $210 billion over 10 years. Iowa life insurance and financial service companies, which dominate the annuity market, say the tax is sending the wrong message to Americans and could hurt sales of annuities.

"I think it sends a very mixed message at a time when the country needs to focus on saving and rebuilding some of the damage that has been done in the markets," said Wendy Waugaman, chief executive of American Equity Investment Life Insurance Co. in West Des Moines. "This goes entirely in the wrong direction."

Quote
"It only applies to income that exceeds $250,000, and annuities from qualified plans — employer-sponsored pension plans and 401(k)s — are not subject to the tax" Sen. Tom Harkin's staff said in a statement. "So no one's retirement security will be weakened."

Quote
Rich Cohan, senior vice president for Aviva USA in Des Moines, said: "It's hard to say right now. Any time taxes are increased, it makes the tax deferral feature of annuities more attractive to consumers," especially in comparison to investments taxed each year."

But he's not ready to support the tax increase on annuity payments.

"Anything that taxes that income ultimately hurts the consumer," Cohan said.

More here - http://www.desmoinesregister.com/article/20100411/BUSINESS/4110323/-1/caucus/Health-care-legislation-contains-tax-on-annuities

At one time, the minimum wage was about $.35 and hour.  Today, it's almost $10 an hour. 

How long before "annuities from qualified plans" swallow your 401K and IRA?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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