Democrats Move To Seize 401(k) Plans

[DirtyFeetDesigns (heb1976)]

This was from an e-mail I received. This is kinda bad. After reading it ... it sounds almost like when there was talk about wanting to privatize social security. Alot of similiarities.

Obama & Democrats Move To Seize 401(k) Plans!
US News & World Report (http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html) published a story yesterday morning in which they uncovered little discussed legislation that would effectively eliminate 401(k) plans and create a second quasi-Social Security system in which the government would take control of the retirement plan savings of millions of Americans.

According to US News & World Report (http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html) along with Congressional Records, a House subcommittee is considering the advancement of legislation that would ELIMINATE 401(k) plans and create as an alternative a "Guaranteed Retirement Account" for every worker in the United States. Under the plan, Americans' existing 401(k) accounts would be transferred into the GRA and would grow at an average yield of around 3%. The subsequent loss of preferential tax treatment among US employers who offer the qualified plans would be used to make a $600 per person government contribution into the plans. In addition, the GRA's would require a mandatory 5% contribution (tax) by all US workers.

Democratic Congressman Jim McDermott (D-WA) who supports the plan was quoted as saying, "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."

This legislation being considered by Democrats is perhaps the most dangerous proposal put forth by the Democrats to date. The system would essentially create a second Social Security System in which bureaucrats would control the funding, investment and use of the money. The government would control all provisions of the plan, and individual rights for determination of risk reward would be stripped.

Like the current Social Security System, which is failing and is expected to collapse unless massive reforms are instituted, the 401(k) replacement program would give no assurance of the protection of funds. The government, just as with Social Security, could essentially strip the plan of assets and use those assets within the general fund. Where is Al Gore and his lock box?

More importantly, consider the immediate implications of such a plan? There is currently $4.5 Trillion dollars invested within 401(k) plans in the United States, the transfer of this wealth to the government would destroy not only the financial markets but would also cause the collapse of an entire industry of financial and accounting companies that have been built upon the Retirement Savings Industry. This would be the largest loss of wealth and seizure of public assets in world history.

In addition, consider the long term ramifications of such a system. A 3% savings rate will essentially double the account value every 24 years. That would mean that if you were 41 years old today and had $20,000 in your 401 (k) plan, that money would now be worth $40,000 at age 65 under the GRA. This GRA plan would depress savings rate to a point that multiple generations of Americans would be unable to outpace inflation within their savings and suffer inadequate incomes upon retirement. The resulting "Welfare" generation would only spurn more government taxes in order to provide for their retirement. The resulting vicious cycle of impoverishment and taxation would never end.

Is this the change that we are looking for?

The seizure of $4.5 trillion dollars by the government. A promise of low returns, no control over assets, and no guarantee that the funds would not be replaced by a promissory note.

Is this the change that you want?

The creation of a welfare state in which the government is responsible for all aspects of our lives as if we were a society of 4 year olds.

Is this change for the better?

A government that will fail to protect the current Social Security & Medicare System but will create new Bureaucratic programs based upon those failing systems.

Is It Really Time To Change America?

Are we now in the age in which we abandon 232 years of government built upon State's Rights, Individual Rights, Checks & Balances, and an American Exceptionalism based upon unhindered opportunity and a government ruled by the people, not established to rule the people.

[HLWalter725]

I think this is a bit of a fear appeal here. Your source is a BLOG, not a news story. And ALL the blog says is that the house LISTENED to a professor discuss plans. THere is no confirmation that a bill has been written or awaiting voting.

I think passing this on is irresponsible.

[NellieRose]

If it were true there would need to be 401K that still had anything in it...most people don't even bother opening their statements thanks to the financial meltdown.

[NellieRose]

I think this is a bit of a fear appeal here. Your source is a BLOG, not a news story. And ALL the blog says is that the house LISTENED to a professor discuss plans. THere is no confirmation that a bill has been written or awaiting voting.

I think passing this on is irresponsible.

Propaganda.......

[FrenchRuby]

would also cause the collapse of an entire industry of financial and accounting companies that have been built upon the Retirement Savings Industry.

This in itself sounds like a really good reason to do it. Expunge as many parasites as possible.

3% is a whole lot more than 401s have made this year. With the way the markets are right now, I think it is a whole lot more than they will make next year, or even the year after that. It probably IS time to ring-fence people's pensions and take away the problems of profit-led fund management, risk-taking with other people's money and market volatility that are flushing ordinary people's pension funds down the toilet. If that means nationalising the pension system, what's the problem? What the government owns is what the people own, not what fat bankers get to play with at no risk to themselves. Sounds like an improvement to me.


PS A national pensions scheme is what we have in the UK, you can take a private pensions scheme as well if you want, but your social security deduction guarantees you a retirement income, albeit a small one, that is totally free of the profiteering tendrils of the market makers.

[Scorpiosue1102]

What I am getting is that this is from a professor that spoke on the Hill. I guess I don't understand how Obama is linked to this?:shrug

[Tiffikat]

I think this is a bit of a fear appeal here. Your source is a BLOG, not a news story. And ALL the blog says is that the house LISTENED to a professor discuss plans. THere is no confirmation that a bill has been written or awaiting voting.

I think passing this on is irresponsible.

This...

[4noisyboys]

If it were true there would need to be 401K that still had anything in it...most people don't even bother opening their statements thanks to the financial meltdown.
So sad but true:(. I am one of those that refuses to open them up. I really don't want to know how much we are NOT worth now!!

[Tiffikat]

I opened mine. I lost $200 so far which isn't terribly but doesn't make me happy.

[HLWalter725]

I opened mine. I lost $200 so far which isn't terribly but doesn't make me happy.

I've already lost $30,000 from my retirement and THAT was only up to the end of September BEFORE the HUGE drop!!! :mad:(

[Tiffikat]

yeah I haven't seen it since the big drop... I cannot imagine losing 30,000.

[HLWalter725]

yeah I haven't seen it since the big drop... I cannot imagine losing 30,000.

Yeah, I'm not a happy camper about it, but I have almost 30 years until I retire, so I'm sure it will recoup. It just sucks because I purposely put away 17% of my income now to make it build for later.

[Glueless Media]

I am sorry that so many of you are out so much money and investments are going bad.:(

[vegaschristina]

We've only lost $600 so far.

[hellosunshine]

I lost 1/3 of my 401K in three months. Right now making 3% guaranteed with potential for more in good times is tempting!!

[tammy1999]

This in itself sounds like a really good reason to do it. Expunge as many parasites as possible.

3% is a whole lot more than 401s have made this year. With the way the markets are right now, I think it is a whole lot more than they will make next year, or even the year after that. It probably IS time to ring-fence people's pensions and take away the problems of profit-led fund management, risk-taking with other people's money and market volatility that are flushing ordinary people's pension funds down the toilet. If that means nationalising the pension system, what's the problem? What the government owns is what the people own, not what fat bankers get to play with at no risk to themselves. Sounds like an improvement to me.


PS A national pensions scheme is what we have in the UK, you can take a private pensions scheme as well if you want, but your social security deduction guarantees you a retirement income, albeit a small one, that is totally free of the profiteering tendrils of the market makers.

401ks and IRA"s can make up to 10% to 15% on average. You can't look at what has happened in the past few months. And I heard this story on the news the other day too. Once again, its taking something that someone has saved and has done very good with it and letting the government take over. It would be the same as Social Security. Another fund for congress to play with.

If you look back in the 90's when the tech stocks fell out and people lost alot of money then too. But, it came back again. I lost half of my IRA in the 90's and it taught me a lesson not to invest in one item. I will sit and wait this one out too.

[txmusicmom]

I want control of my own money- Period . Dot.

Any losses are only paper losses unless you sale.........and the stock market is a risk..........it goes up ....it comes down.......but over time.
That's why you diversify-- remember 8 years ago with the DOT COM bubble crashed?

[tammy1999]

I want control of my own money- Period . Dot.

Any losses are only paper losses unless you sale.........

Exactly. Thats why I like my Roth IRA. I can control it the way I want to. And the best part, tax free when I need it.

[FrenchRuby]

How have they made 15%? On the markets. Or to put it another way, through getting a share of the profits of the very same risky, profiteering gambles with other people's money that got the world into the financial crisis it is in right now.

And you absolutely CAN look at the past few months, this isn't part of a natural cycle, it's a denoument of a corrupt system. If you want the markets to come back up (and your share-based wealth to come back up with it) then you have to subscribe to letting things continue as they were before this 'crash'. Since the elements of it's own downfall are built in, painfully obvious and won't just disappear overnight, does that sound like a sensible or even moral thing to want to do?

Personally I think saving for retirement is not something that an ethical person does on the back of the shady financial practices of city brokers, nor is it something that a sensible person does once they know (by observation of the facts) how fake and inevitably fragile that system is.

I'd take 3% of definite over 15% of pretend and prone to disappear at any moment, any time.

[Gina.Maria]

Ruby, you've made an excellent point and one I hadn't considered before. I'd still be wary of having the government in control of 401K accounts - only because Social Security has taught us lessons in the fiscal irresponsibility of our government. I'd consider a switch from the 401K to an IRA before I'd willingly hand over my savings to the Feds. Though, I guess it doesn't matter anymore since the government holds shares to almost all our financial institutions now. :(

[hellosunshine]

I think you will have to live a long time to make these losses up. People who thought they were retired are now searching the help wanted ads to make up for the 50% or more losses. In actuality there is a myth that over time stocks average 8%, but that is not true and hasn't been for quite a while. Yet, people continue to perpetuate such myths without looking at the realities of the final statements. It's the same type of myth that Greenspan admitted about housing this week. He had to admit that housing doesn't always go up. There are no guarantees, and no one can be assured of anything anymore about our financial future.

[tammy1999]

I think you will have to live a long time to make these losses up. People who thought they were retired are now searching the help wanted ads to make up for the 50% or more losses. In actuality there is a myth that over time stocks average 8%, but that is not true and hasn't been for quite a while. Yet, people continue to perpetuate such myths without looking at the realities of the final statements. It's the same type of myth that Greenspan admitted about housing this week. He had to admit that housing doesn't always go up. There are no guarantees, and no one can be assured of anything anymore about our financial future.

And the government handling my retirement is a guarantee too? And my IRA has proven to me that it over all has made much more than 3%. I would not say that its a myth.

[NellieRose]

So sad but true:(. I am one of those that refuses to open them up. I really don't want to know how much we are NOT worth now!!

Debra, I recently heard an interview where the guest worked for a financial institution and said that over the last many months the company website traffic had all but halted thanks to people NOT logging in to check their accounts for fear of seeing how much it had been going down over time. :(

It all brings me back to all the people that wokled at Enron and what was lost there......so terrible. :eek

[tammy1999]

How have they made 15%? On the markets. Or to put it another way, through getting a share of the profits of the very same risky, profiteering gambles with other people's money that got the world into the financial crisis it is in right now.

And you absolutely CAN look at the past few months, this isn't part of a natural cycle, it's a denoument of a corrupt system. If you want the markets to come back up (and your share-based wealth to come back up with it) then you have to subscribe to letting things continue as they were before this 'crash'. Since the elements of it's own downfall are built in, painfully obvious and won't just disappear overnight, does that sound like a sensible or even moral thing to want to do?

Personally I think saving for retirement is not something that an ethical person does on the back of the shady financial practices of city brokers, nor is it something that a sensible person does once they know (by observation of the facts) how fake and inevitably fragile that system is.

I'd take 3% of definite over 15% of pretend and prone to disappear at any moment, any time.

I was referring to over the whole span of an average retirement. 20 to 30 years.

The recent fall isn't going to dissapear overnight. I didn't dissapear in the 90's either. But my IRA came back to where it was plus more. And I have enough years to sit back and watch what I have lost to come back again. And its not pretend 15%. Government taking care of my retirement money is pretend.

Here is a good example of what our government can do to retirement money. I am using Social Security. My husband worked 32 years as a fireman and paid into a pension plan. He also worked 12 years in the private sector to make ends meet and also paid into social security. Do you know that when he turns 62 he will ONLY receive half of what he is suppose to get because he was a government employee with a pension. The governement doesn't think these employees deserve 100% of their SS earnings, only half. Do you have any idea what that does to some retirements? Oh and the kicker is congress is exempt!

Now that is typical government taking care of retirement plans for ya.

Oh yes and lets not forget that congress is vested for benefits after 5 years of service and some of their benefits they don't have to pay for. You think they will offer America that kind of plan?

[FrenchRuby]

I would imagine that if the existing state pension/SS scheme was working well that Mr Obama wouldn't be proposing to change it.

I hope you eventually get your share-linked savings back, but I don't think it's a given that you will. The reasons behind the crash are to do with the fundamentals of how the markets work. I think there is a good chance (and I hope it's a chance that is taken) that market reform will permanently change the kind of returns it is possible or likely to achieve with share-linked investments. If they put an end to derivatives, as they are threatening to do, that will drastically reduce the kind of returns fund managers can get on their bets (bets they make with your money by the way), and subdue the stock markets in to long-term single figure growth at best.

Following the last Wall Street crash, the stock markets did not recover their pre-1929 levels until late 1954. The circumstances, pre-crash bubble and causes of the 1929 were almost identical to those of the 2008 crash. I hope the aftermath won't prove to be the same as well.

Nevertheless, I hope you are more than 25 years from retirement. You may need to be.

[DirtyFeetDesigns (heb1976)]

What I am getting is that this is from a professor that spoke on the Hill. I guess I don't understand how Obama is linked to this?:shrug

That was an honest mistake on my part. I wasn't trying to link Obama to it ... manly saying what Dems might try. I seriously didn't even pay attention to the Obama part; I just saw Dems.

[Scorpiosue1102]

No worries :)

[Theresa Hernandez]

I'm confused, the title says that Obama wants this, and yet the article never mentions him beyond the title. Is he tied to this merely because he's a dem? If so, that's crazy. All dems are not alike just like all republicans aren't the same. I guess I need a little more solid proof that Obama is going to try and implement this if he gets elected before I run screaming from the building in a sniveling pile of panic.

[dgreenshield]

Not sure where the Obama connection is on this one...again, we can find information on the web that will raise questions about one group or another.

Just generally speaking, I want control of my own retirement accounts. Here is why...
As a teacher we don't pay social security so my 403B is on top of my teacher retirement fund. However, I was one of those people who went from a nursing job, paying into the system, to education and I will not get the SS I paid in! I also will only get a tiny portion of my husbands benefits because I have my teacher retirement plan. But, there are people who are double dipping even triple dipping from the system because they were retired military then went to work in a government job and will recieve SS.

[Inkspots]

However, I was one of those people who went from a nursing job, paying into the system, to education and I will not get the SS I paid in!

This is so wrong! I think there are a few states that allow you to get your social security if you pay in before/after teaching, but others that do not. I feel if you pay in to SS, you should be able to receive SS, no matter what. If I'm not going to be given the benefit, even if it's just at a lesser rate, then why am I paying? (Although I do understand that I need to pay in order for it to be there for others.)

ETA: SS and Military, I've seen a few places now that military don't receive social security and thought this odd--just found this (http://www.ssa.gov/pubs/10017.html).

[movefearlessly]

This is so wrong! I think there are a few states that allow you to get your social security if you pay in before/after teaching, but others that do not. I feel if you pay in to SS, you should be able to receive SS, no matter what. If I'm not going to be given the benefit, even if it's just at a lesser rate, then why am I paying? (Although I do understand that I need to pay in order for it to be there for others.)

ETA: SS and Military, I've seen a few places now that military don't receive social security and thought this odd--just found this (http://www.ssa.gov/pubs/10017.html).

my dad's retired military. the day he became eligible for SS, the military reduced the amount of his pension by the exact amount that he began receiving from SSA. this, IMHO, is extremely unfair. he paid SS out of every paycheck, plus stuck out a career in the military - in the 50's, 60's, and 70's - no mean feat, let me tell you. it's ridiculous. don't even get me started on his VA benefits (or mine, for that matter). how many congressmen and women will be forced to accept a reduction in their retirement because they're eligible for a program they paid into?

[Inkspots]

my dad's retired military. the day he became eligible for SS, the military reduced the amount of his pension by the exact amount that he began receiving from SSA. this, IMHO, is extremely unfair. he paid SS out of every paycheck, plus stuck out a career in the military - in the 50's, 60's, and 70's - no mean feat, let me tell you. it's ridiculous. don't even get me started on his VA benefits (or mine, for that matter). how many congressmen and women will be forced to accept a reduction in their retirement because they're eligible for a program they paid into?


You're right that is wrong! I did see in the site that it doesn't look like military paid into SS until later, so maybe that is something? But this goes back to all other retirerees too, if you have a pension plan NO ONE should be able to touch it or change it, ESPECIALLY AFTER YOU ALREADY RETIRED. I got scared though when I started reading about the military and SS because we thought we'd be collecting someday as well. DH only has a few years to go before retirement.

[HLWalter725]

My current job doesn't pay into SS. I have enough credits to get social security from my previous jobs, but it won't be much -- in fact I'm not counting on it being around by the time I retire.

[DirtyFeetDesigns (heb1976)]

I'm confused, the title says that Obama wants this, and yet the article never mentions him beyond the title. Is he tied to this merely because he's a dem? If so, that's crazy. All dems are not alike just like all republicans aren't the same. I guess I need a little more solid proof that Obama is going to try and implement this if he gets elected before I run screaming from the building in a sniveling pile of panic.

Not sure where the Obama connection is on this one...again, we can find information on the web that will raise questions about one group or another.


As stated here : That was an honest mistake on my part. I wasn't trying to link Obama to it ... manly saying what Dems might try. I seriously didn't even pay attention to the Obama part; I just saw Dems.

[Theresa Hernandez]

As stated here :

No, was referring to the title of the article, not the OP's view point. The blog poster himself, I guess. Assuming it was the blog poster's title.