Friday, October 24, 2008

Kiss Your 401k Good Bye!!

Have you looked at your 401k lately? Many of us have chosen not to look at the numbers and just ride this nasty wave out. After hearing the following information, you may want to look at it just in case the Democrats get the win they are planning November 4th.

As I wrote yesterday, the closer the election, the more the Democrats are coming out of their liberal shells. Barnie Frank, again filled with the gift to gab, gave us another inside look at the Democrats' agenda. How will they pay for the almost $1 trillion in new spending that they propose? The first way is to cut military spending by 25%. Does anyone else have concerns about cutting our military as Russia enters our waters to the south and Iran inches closer to nuclear weapons? I digress..that's a whole different post.

What's another way they could raise some money to fill up their social program coffers? How does seizing your 401k plans sound to you? Think it's far-fetched. Think again. Think Democrats aren't dumb enough to try it....we can only hope.

The Democrats are considering just this option should they take super majorities in both the House and Senate. Democrats have stated in recent months that they don't like tax-free deposits to 401k accounts. This is tax money that they could be using for other programs. According to US News & World Reports :
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "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."

Do you have a 401k? Do you make less than $250k a year? Well apparently, if they chose this option, Obama's promise not to raise taxes on those making less than that will go out the window. Your company will no longer have incentive to participate in matching funds. Instead of the potential to receive thousands from your employer matching fund, the government will be happy to give you a measly $600 per year. Whoo Hoo.....start celebrating.

Your taxable income will go up because your retirement savings deposits will no longer be tax deferred. So yes, not only will you be paying more income tax, but state tax, local tax.....should I continue? If workers through their 401k accounts are no longer investing in the stock market, exactly what will that do to our stock market? What will that do to our economy?

The government has done such a great job with social security. Do you really want them controlling the one retirement plan that you currently control?

UPDATE:  I was originally going to add this tidbit to the post above, but left it out.  Argentina recently did this exact same thing.  They took control of all retirement plans, they have a different name for them.  Guess what happened to their stock market right after it happened?    IT LOST 26% IN ONE WEEK!  

22 comments:

Anonymous said...

Let me be perfectly clear on this.....

If the government tries to seize 4.5 trillion dollars of retirement savings from the citizens of this country, and forcefully transfer those savings into a government controlled GRA it will trigger a civil war.

PERIOD!!!

The New Conservative said...

I heard this on Rush today. I hope the dems do try it. Then we will be sure to retake congress in 2010.

Denise-Mary said...

If Obama "wins" on November 4, I'm withdrawing the maximum I can out of my 401(k) - as a loan from myself to myself. Then I'll park those funds in an interest-bearing account which can't be touched by the Feds - unless of course their next move is to seize private savings accounts. Or maybe I'll just withdraw the funds and pay the early withdrawal penalty. Point is, folks, figure out a way to scr___ them back. Try to lock up your pension funds in some way where the Dems can't get their hands on YOUR money. If you know/have a good CPA or lawyer, now's the time to be talking - do it before January 20.

Anonymous said...

Not only will the Republican's retake both houses of Congress in 2010, but Obama will surely be visited with impeachment and prison. The Republican's will have a mandate from the citizenry to clear out every last socialist/communist from the federal government.

Can you say McCarthyism revisted?

The liberals would be wise to run from legislation like this. Oh, that's right, Liberal & Wise is an oxymoron.

sharon said...

http://www.washingtonpost.com/wp-srv/local/longterm/tours/scandal/gobie2.htm

Read the above link.
Barney Franks is a scumbag, and he is in charge??Who else did he pick up when he trawled the station toilets? Maybe he has a brain disease.

Anonymous said...

It is interesting to find lately that Americans are no longer racist since Hussein is up in the manufactured polls!When Mc Cain was even in the polls with the One,every democrat was calling us Aerican racist.The argument was dangerous.What to do?Hipe the polls to make Hussein look like a winner.NYT: +13 wash post:O+10.They Play down or dismissed the IBD poll that shows an even race.Remember America Omba won only 4 states that vote like in GE.Be affraid,very very afraid,because we are racist.

Anonymous said...

401K's and IRA's are being hit hard right now due to the downturn in the DOW etc.I voted early today in deep blue Cook Couny,Illinois and perhaps the liberal Dems here will get a surprise when the votes were counted!A Dem super majority in congress is scary !

Anonymous said...

Not just 401k. I have been reading a lot about how the stock market is so volatile now because of the perceived inevitability of Obama being elected.
With the shadow of increased taxes on capital gains, dividends, energy taxes, etc. there are few good ways to invest without being penalized. The idea of an Obama Presidency combined with a Democratic veto-proof Congress is now the number one factor affecting the financial markets. Newt Gingrich offered an acronym for this Democratic takeover-- REPO (Reid/Pelosi/Obama).

Anonymous said...

I have cleared out my investments in most U.S. stocks in anticipation of an Obama victory. Basically, most of your U.S. stock investments are going to drop substantially. Don't worry about the substantial increase in corporate tax as much as card check and possible right to work repeal.

So Denise Mary-I would do what you are suggesting doing now. Just put it into cash and loan it to yourself!!

Why should you invest in an economy when the leadership has decided that its time to massively favor labor over capital? Basically that means they don't give a damn whether the investor makes any money or not, because they want everything to go to the worker and the unions. Has that worked for GM, Ford and Chrysler? Not exactly!

Don't buy this crap about "green jobs." Those jobs will fade with the price of energy. The price that a seller can reap will drop with the imposition of Obama's tax on CO2.

So pull out your investments from your 401K. Take half of it as a loan if you want to so you don' have to pay tax on it!

Anyway the 401K repeal may be a blessing considering the proposed policies that are designed to destroy value.

Anonymous said...

The approval rating of congress is lower than the president right now.
And yet the polls are saying that a liberal Dem super majority in congress is a real possiblity.
Reid,Pelosi,Obama,Chris Dodd,Barney Frank and Chuck Schumer should not hold any high office.

Anonymous said...

If you look at the stock market as dependent on a flow of funds, i.e., the Liquidity Theory, then taking future contributions from 401Ks will destroy the stock market.

Anonymous said...

What would you Repugs do if you didn't have FEAR to run on ? Always got to have a boogy man. If you heard it on Rush - then it's bullshit.

Clay Bowler said...

So the democrats failed miserably to make FDR's Social Security plan to work and now they want to ruin the only hope I have of retirement. How can anyone not see what is going on and actually vote democrat this election. They are ruining the economy. Do you understand what the markets are going to be like once these anti-market policies begin? I blogged about this too. You can read my blog at http://bungalowbillscw.blogspot.com/
I am mad. These democrats need to go. There is nothing pro economy about them.

Jamison said...

I am hearing more and more about this, and reading more and more about this... scary.. but one thing I AM NOT reading...

WHAT TO DO ABOUT IT!

No, not just "vote republican" but heck, I will pull all my money out of my 401k and stash it in some savings account at my local credit union for the next 8 years if I have to... but I dont KNOW what to do?

Someone with a financial/investment background PLEASE offer a suggestion....

Clay Bowler said...

Jamison,

I spoke with my investment advisor today, and he's not quite sure what to do either. For the short term, he was thinking an IRA, but long term he is just ridng it out right now and watching this develop. Let's hope the dummycrats leave our retirement hopes alone. You and I both know, this is just their way of having more power over the masses. You should be very scared of a government controlled by Obama, Pelosi, and Reid.

rubyrampaige said...

wake up! my employeer stopped contributing to my 401k years ago!!LOL my employeers don't care about me. under the current, soon to be past, administration they would've found a way to taken my pension plan soon too!! Even w/ all the tax breaks for big business so they can reinvest in the company and the employees my employee claims stockholders and profit are more important that loyalty and employee wellbeing!!
All of you talk about your evasive behavior to hide your money... hell i'm a worker bee! Under the current administration labor is not valued! Workers are not valued! I don't have money to hide and move around. All of you must be upper management that still gets bonuses even with failing companies and poor performance while asking the lil' guys for 'necessary' pay cuts!

JazzMann said...

LOL @ Ruby...
relax... you sound rally clueless..
in MOSt legitimate, good standing companies, you dont need to be upper management to put money back and get into a 401k or heck, contribute to your OWN Roth IRa like I do.
It takes the following...

NOT KEEPING UP WITH THE JONES'S!

My family and I do without A LOT of stuff that other people our age get... but that is okay, we learn to do without and focus on the future...

Quit whinning and do something for yourself

Stacy said...

Wow Ruby...sorry about your job. Have you thought about changing it? my husband's company offers 401k to their hourly staff. They match .50 on the dollar up to 6% of your salary. The same as the upper management as you call them. Both my husband and i worked our way up in the company. There are jobs out there like this even in this economy. I wish you luck

Stacy said...

Oh Ruby..one last thing. If you do have a 401k, you are still getting the tax break for contributing to it. The Dems want to take that tax break away from you. But I'm sure you make over $250k because they said they wouldn't tax you otherwise.

Anonymous said...

wake up - it's not Rush - it's being discussed in the Education and Labor committee in the House!

I'm not a fan of Rush's either but he doesn't out right lie. Look it up to prove it to yourself.

http://www.carolinajournal.com/articles/display_story.html?id=5081

here is the testimony
http://edlabor.house.gov/testimony/2008-10-07-TeresaGhilarducci.pdf

Ghilarducci explained “I’m just rearranging the tax breaks that are available now for 401(k)s and spreading — spreading the wealth.”

I'll withdrawn my 401K pay the penalty and put it off shore somewhere if it comes to that.

these people are on CRACK if they think that can take people's money like that.

clayton said...

Thank you for sharing this information.
Fidelity 401k

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