"Obama Administration Plans to Seize 401(k) Retirement Accounts"

[WhiskeyGirl]

Obama Administration Plans to Seize 401(k) Retirement Accounts

Written by Joe Wolverton, II   
Wednesday, 05 May 2010 12:45

One aspect of a new and improved federal regulatory scheme is the seizure of 401(k) retirement plans and the subsequent government-administered disbursement of the funds.

In Chapter 3 of the Annual Report on the Middle Class released in February by Vice President Biden and the White House Task Force on the Middle Class, the Obama administration calls for enhancing the “retirement options” for the middle class by imposing “new regulations to improve the transparency and adequacy of 401(k) retirement savings.” 

The plan, as sketched in the 43-page document, calls for the creation of something called  “Guaranteed Retirement Accounts” (GRAs). Biden slyly shifts the onus for the idea through weasel words typical of the federal government: “Some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

These accounts would be “free of inflation and market risk” because they would be under the direct and absolute control of the federal bureaucracy. There would be no risk because the funds would no longer be moored to the free market and subject to the fluctuations thereof. Rather, the retirement funds of every hard-working American dependent on a 401(k) for their retirement security would be nationalized and made subject to the whims and will of the executive branch.

Coinciding with the publication of the report described above, the Obama White House, together with the Departments of Labor and Treasury, issued a so-called “Request for Information” calling for a detailed analysis of the pros and cons of the “annuitization” of individual 401(k)s. The scheme was set forth in a set of “Proposed Rules” published on February 2, 2010 in the Federal Register.

http://www.dol.gov/federalregister/PdfDisplay.aspx?DocId=23512

more here - http://www.thenewamerican.com/index.php/usnews/politics/3478-obama-administration-plans-to-seize-401k-retirement-accounts

[WhiskeyGirl]

from the comments -

Still Free  said:

   They're at it again...
Remember they need to find some way to pay for all the bailouts and they can't stand to see some cash sitting around somewhere. The fact that that cash does not belong to them certainly will not stop them. They have already raided the Social "Security" funds paid via taxes by American workers.

If the folks on the government dole or on the government's payroll via jobs were smart enough to figure this out they would be very, very alarmed -- when all sources of revenue are exhaused (as in from us), where will they get their money?

From where I sit, it isn't looking very pretty for anyone living in America.

[WhiskeyGirl]

Are the Feds Trying to Nationalize Your Retirement Savings?

For some time, there have been rumblings that the federal government might try to solve its budgetary problems by nationalizing (i.e., stealing) the money that millions of Americans have set aside for retirement in 401(k) plans and the like. One way they might do this is to confiscate the cash on hand in exchange for a promise to make future payments in the form of an "annuity." An involuntary annuity, in that scenario.

I haven't taken this speculation too seriously, mostly because the core of the Democratic Party consists of lawyers, and a lawyer's most precious possession is his 401(k) account. One of those who have taken the threat more seriously is Congresswoman Michele Bachmann, who co-authored a letter warning the Obama administration against any attempt to confiscate Americans' retirement savings. You can read the letter here. It says, in part:

    In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called "Guaranteed Retirement Accounts (GRAs)" which would provide protection from "inflation and market risk" and potentially "guarantee a specified real return above the rate of inflation" -- presumably at taxpayer expense. ...

    The Vice President's comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary -- again, with a government subsidy. These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen.

The letter goes on to discuss a "Request for Information" that has been issued by the Departments of Labor and Treasury on the "annuitization" of 401(k) plans:

    Similarly, and more recently, the Departments of Labor and Treasury have jointly issued a "Request for Information" regarding the "annuitization" of 401(k) plans through "Lifetime Income Options." ...

    [W]e urge that the Departments take no action to mandate that plan sponsors -- often, small businesses -- include a "lifetime income" or "annuitization" option if they choose to offer a 401(k) plan to their employees, or that beneficiaries take some or all of their retirement savings in such an option.

...

There are, of course, benefits to such products. There are also drawbacks; most notably, they do not allow the saver to leave money to his children. If you die prematurely, you are just out of luck. In that respect as in others, lifetime annuities look a lot like Social Security. It is not clear why the federal government should be in the business of promoting one form of retirement product over another.

But, while the Request for Information definitely exhibits a paternalistic attitude, it doesn't explicitly say anything about confiscating 401(k) accounts, or about the government taking on the role of annuity issuer.

At this point, I think the best we can say is this: the federal government is desperate for cash, and the biggest untapped source of wealth is the hundreds of billions or trillions of dollars that Americans who are now nearing retirement age have saved over their lifetimes. I don't doubt for an instant that the Obama administration would like to get its hands on this money, which would go a long way toward resolving the current government debt crisis. An obvious way of doing so is to take the money now, in exchange for a promise to pay an "annuity" later. The bottom line is that, given what we know about the Obama administration's rapacious appetite for swallowing up private wealth, anyone who has savings should be vigilant.

http://www.powerlineblog.com/archives/2010/05/026260.php

[WhiskeyGirl]

In an economy suffering from excess debt, insufficient savings and unfunded government obligations, it is hard to imagine a more misguided policy than to discourage savings by reducing individual access to assets and creating a new government entitlement.  Think of it, the same federal department with responsibility for mine safety, the Department of Labor, could assume a larger role over your retirement savings.
 
The impetus for this pension scheme comes from a new group, "Retirement-USA,"[1] founded by the AFL-CIO, SEIU [2] and a number of labor affiliated organizations. Their plainly stated goal: "The system should be administered by a governmental agency or by private, non-profit institutions that are efficient, transparent, and governed by boards of trustees that include employer, employee, and retiree representatives."
 
Other Retirement-USA goals include restricting employees from taking lump sum distributions at retirements, preventing savers from accessing funds before retirement or from stopping remaining pension assets from being left to family members at death.
 
Given the performance of union managed pension plans, SEIU seems a surprising source of advice on private pensions.  According to the Wall Street Journal, public records based on the SEIU's own filings show that the SEIU National Industry Pension plan - which covers some 101,000 workers - was only 75% funded in 2006. "Put another way, the plan had only three-fourths of the money it needs to meet its retirement obligations. And the national chapter is only the start. Some 13 local SEIU pension plans in 2006 were less than 80% funded; several didn't reach 65%."[3]

The contrast between the two political parties on savings policy could not be clearer.  The Obama Administration is moving toward a more collectivist strategy in which individuals have reduced access and less control over their own assets.  Republicans instead would encourage improved individual balance sheets with more savings.

http://www.rightsidenews.com/2010050910105/politics-and-economics/are-private-pensions-the-obama-administrations-next-target.html