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I think they would like to roll all private retirement money into the treasury and offer an annuity of 3%. Conventional wisdom is that you can draw down 4% a year and not deplete your accounts. A 3% annuity would give them a 1% profit. Also the annuity balance would revert to the government when you die, not to your heirs. Lastly, however many trillions of dollars we're talking about would give the government a big cushion against the deficit, public debts and unfunded liabilities. I don't think anyone is really sure how much money is at stake, you hear of anything from 10 trillion to 50 trillion, depending on the "expert". I put "expert" in parentheses because it's the "experts" who have gotten us into all this trouble. I can't remember ever hearing about a trillion of anything until I was in my '50's. Scary! Of course, they're going to want to cut Social Security, Medicare, everything else and put the blame on the shoulders of everyday people for the government's situation. It seems they are already putting out "news" that Social Security is going broke by 2033 instead of 2037. It makes me angry when they start calling it an entitlement, when it is a tax we have paid into for many years and continue paying. That's an entitlement?, BS! What we are responsible for however is that election cycle after election cycle we keep re-electing the same old same old. Will we learn before it's too late? Whenever you see the President picking advisors, cabinet members, "czars" (that is so bogus--where's the accountability?), policy makers, etc. from the ranks of elite, liberal universities, watch out- we're in trouble.
Sadly what you talk about has been discussed and it would cause a revolution. Just because some can't hand their retirement drawdowns is not just cause for the government to want to seize the accounts of all. Not a broad consensus wants to do it but some fans of big government do.
My research finds that there was a House Ways and Means Comittee hearing on: "Tax Reform and Tax-Favored Retirement Accounts" per Chairman Dave Camp's Ways & Means webpage on April 17, 2012. This would appear to fall into the timeline of the OP's linked article. However, I cannot find any details or links as to that specific hearing.
As this country climbs further toward bankruptcy EVERYTHING the government can find to tax, living or dead, it will, IMO. YMMV
Sadly what you talk about has been discussed and it would cause a revolution. Just because some can't hand their retirement drawdowns is not just cause for the government to want to seize the accounts of all. Not a broad consensus wants to do it but some fans of big government do.
I've seen this discussed among "tin hats", but that's about it. Do you have a credible source?
These plans would be an awful development. I thought 401K contributions were already capped at 15% of your salary plus (if youre elegible) a $5500 catch up contribution the sum of which was subject to a maximum.
This is not without precedent in the socialist game book. Argentina in 2008 confiscated all the private retirement accounts bringing into the social security system to "protect the assets" of their citizens from the global financial crisis.
If you have a 401(k) or equivalent retirement plan, you've probably been watching nervously the past few weeks as your nest egg has shrunken owing to the current turmoil in the markets.
Quote:
Well, it could be worse. But don't take heart, for what we mean is it could get worse. The market turmoil has some politicians on Capitol Hill eyeing the end of the 401(k) as we know it. Workforce Management reports on a hearing of the House Education and Labor Committee earlier this month:
Quote:
A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered
Ghilarducci outlined her plan last year in a paper for the left-liberal Economic Policy Institute, in which she acknowledges that her plan would amount to a tax increase on workers making more than $75,000--considerably less than the $250,000 Barack Obama has said would be his tax-hike cutoff. In addition, workers would be able to pass on only half of their account balances to their heirs; presumably the government would seize the remaining half. (Under current law, 401(k) balances are fully heritable, although they are subject to the income tax.)
Under Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
"I want to stop the federal subsidy of 401(k)s," Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."
Ghilarducci outlined her plan last year in a paper for the left-liberal Economic Policy Institute, in which she acknowledges that her plan would amount to a tax increase on workers making more than $75,000--considerably less than the $250,000 Barack Obama has said would be his tax-hike cutoff. In addition, workers would be able to pass on only half of their account balances to their heirs; presumably the government would seize the remaining half. (Under current law, 401(k) balances are fully heritable, although they are subject to the income tax.)
Sounds pretty unappealing, doesn't it? But in her congressional testimony, Ghilarducci offered a sweetener:
Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap. . . .
How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security.
A 55-year-old who lost 20% of his 401(k) because of the recent stock market decline was investing more aggressively than he should have, given his age. Ghilarducci proposes to reward this imprudence in exchange for dramatically limiting everyone's ability to take risks (and enjoy the corresponding rewards) and for greatly increasing government control of Americans' retirement funds.
It is by no means a certainty that Congress or a President Obama would embrace such a proposal, but this is a direction in which things may move if the Democrats make big gains next month.
The New York Post is an awful news source. One of the worst tabloids in the nation. So I wouldn't put too much faith in any of the opinions expressed there. Many of us have retirement accounts, 401k's that are taxable when we withdraw money. Only the Roth 401k and IRA are paid for with after tax $ right now and, therefore, the withdrawals are without further tax. Maybe I've missed something in the tabloid report. I'm not going back to read, though, because the paper, from what i've seen in other links, is all about scare tactics.
The New York Post is an awful news source. One of the worst tabloids in the nation. So I wouldn't put too much faith in any of the opinions expressed there. Many of us have retirement accounts, 401k's that are taxable when we withdraw money. Only the Roth 401k and IRA are paid for with after tax $ right now and, therefore, the withdrawals are without further tax. Maybe I've missed something in the tabloid report. I'm not going back to read, though, because the paper, from what i've seen in other links, is all about scare tactics.
I've seen this discussed among "tin hats", but that's about it. Do you have a credible source?
Here is another one that discusses more redistribution of retirement wealth SS from high wage earners to low wage earners. It argues that low wage earners don't live as long so they should get a larger share of the pie while they are alive. There are members of congress who support this.
A number of proposed Social Security reforms would increase the link between workers' Social Security contributions and their retirement income by supplementing or replacing the current system with defined-contribution personal retirement accounts (PRAs). These proposals have led to concerns that some of the redistributive and poverty-reducing components of the system would be lost.
Liebman suggests that his results have two implications for such Social Security reform. First, they suggest the magnitude of redistribution that a PRA-based plan would need to achieve in order to maintain the current level of redistribution from high-earners to low-earners. A mixed plan in which PRAs are responsible for about one-third of the retirement income from Social Security would require the equivalent of $7 to $10 billion per year in transfers. However, most PRA plans would mandate that retirees convert at least part of their account balances into annuities and thus would redistribute from demographic groups with short life expectancies to groups with long life expectancies). Therefore, several billion additional dollars of transfers would be necessary to maintain the current level of redistribution.
Read it for yourself and see if what is being advocated is that even with personal retirement accounts some of that money would be used for other people.
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