Skip to comments.Do You Like the 401(k) System?
Posted on 11/29/2012 2:59:09 PM PST by DontTreadFred
Do you like the 401(k) systems? Ray Fisman says that the Fed should end the 401(k) because it is not helping people to save more money - http://www.slate.com/articles/business/the_dismal_science/2012/11/fiscal_cliff_401_k_s_and_iras_cost_the_government_billions_should_we_get.single.html. While I couldnt disagree more with the reason Fisman wants to end the 401(k) system, I do think it isnt helping average Americans. I think people would build up better savings by allowing pretax dollars to be used to pay down mortgage debt?
How about pay for your house AND save for retirement?
This is about the ninth article regarding 401k’s that I’ve seen in the last few days.
What’s that saying? “Setting us up for the bomb.”?
(It would be interesting to search the frequency of health-care articles prior to the take-over).
It is a wonder we managed at all. (/sarc)
I have been in one (401K’s and IRA’s) for the past 30 years, and had always thought they were a great deal. Now that there are rumblings of Obama confiscation of these accounts for funding a national pension / SS fortification.............. Not so much
I've got nearly a million bucks that says you're full of it, Ray.
Would be more if Obama hadn't been elected in 2008.
...and I’ll raise you another 2!!!!!!
The old defined benefit pension is better for employees, but the government regulations have made them so expensive to maintain that only a few businesses and the government have maintained them.
The 401(k) makes saving for retirement the responsibility of the employees. This is not a judgement on them. I’ll leave that to each individual to judge. I’m just presenting facts.
The risk involved in a defined benefit pension involves the health and survival of the sponsoring company, which bears the investment risks. while the risks of the 401(k)/403(b) are the usual investment risks, and are born by the participant employees.
For government employees - the risks are all born by the taxpayers.
Yup. 0bama/Reid/Pelosi/Unions/Black/Illegals are coming for YOUR money, America. They want it all.
People thought they were voting for a Black man. They voted for THIS.
How could a savings plan that is wildly popular and has tax advantages possibly NOT help people save???
Also, they want to take them away because people have saved so much in them.
What does all this tell you?
Let’s make 30 million Mexican citizens that are here illegally into voters, that will fix it!
Exactly, Williams. That huge sum that responsible savers have built up is just as attractive as the SS Trust Fund was back in the 60s. And now it’s gone. I do believe the 401Ks, being personal property and all, will pose a greater challenge for the government to take: but Pelosi, Reid and Obama are up to it.
I direct/manage my own retirement funds...and I've done just fine. No rules, no fee's...no locked in crap.
Not only did we appreciate the tax-deferred savings, but let’s not leave out the employer matching, which was an additional incentive to save.
Besides, when discussing mortgage debt-payoffs, let not forget that all it means is that the bank no longer owns the note on your house.
You still owe taxes, every year, no matter what. So who really owns the house at the end of your mortgage? Hint: it’s not YOU.
The goverment has only “maintained” pensions by stealing from tax-payers.
Most private companies have forgone the defined pension or are about to. The “government regulation” was an accounting rule change that made business list pension liabilities as a cost around 1988. Prior to this date pensions were just something many companies had but no idea if they had the funds to maintain them. GM looked okay on paper prior to this date. After 1988 not so much. Pensions cost money and are expensive to maintain but it has nothing to do with government regulations. Ask former workers of Poloroid about their pension.
My 401K is basically the same value at was 12 years ago. Wonder how much money the traders made off of that money?
I agree. As of now I have about 9,000 in my 401K and I really need that money since I have been laid off last October. That money can help me. I received a letter asking what I wish to do with it since I am no longer working for the company. From my understanding there will be a 10% plus another 20% that will be taken. I am now regretting for ever have to open a 401K I would rather keep my money in my bank, mattress or bra. At least I can get access to my money with no penalty or regulation. If I cash out I will get little out of the 9000 leaving me about what 2,000 while Obama and the government keep the rest. Never again will I open anything similar.
401K’s are a financial disaster that your usually locked into untill your retirement.
It didn”t help tha the market crashed every ten year or so.Though you would probably do worse putting the money in the bank.
The 401K is the only thing the government did that benefited the citizens...if they take that and IRA, blood will run in the capital. I thief is a thief....since many took advantage of the 401K, the government and its jealosy and envy of what others have saved is too tempting for them not to make a try for it....I don’t know what the penalty is for taking it out sooner, but might be worth the cost rather that have them take it all. With my IRA, which they also talke about taking has quite a bit in it...I have been living off it for years and have just now reached the point of tapping into princpal...I have a great financial guy and have been using him for 20 years....since my husband passed away....he has done good by me....
The only people that 401(k)s don’t help are the ones who don’t participate. I participated to the max almost every year I had it available to me and am very glad I (and my wife) did.
“I’ve got nearly a million bucks that says you’re full of it, Ray.”
A million bucks, ehh. You and other 1 percenters (not that you are, but that’s what they think) could do a LOT OF GOOD in helping to reduce the debt burden for future generations. So we’ve got this deal. Take it or take it...
That’s how it will go.
I agree. If the government takes the IRA and 401K’s, it will be the greatest bait and switch in the country’s history. Obamacare has this country on the edge right now. Retirement account confiscation would be the triggering point that might trigger a revolt.
Defined benefit plans were always unsustainable. Defined contribution plans make much more sense. 401k’s are a good idea but I think it makes sense to hedge your bets and split your savings between a tax advantaged 401k/IRA and regular savings and investment vehicles. If the government doesn’t start outright confiscating 401k’s then they’ll be using them for means testing to limit social security. Either way, the planners and savers lose.
The reason they're going after the 401K's is because it's just not fair that the privileged can work and save while the, um, underprivileged cannot. It's all in fairness...leveling the playing field, redistributing your wealth.
Shame on you for taking advantage of a program that, while allowing you to save for your retirement, kept the government from their fair share of your income.
There’ll never be a revolt as long as television is full of sports, sports, and more sports.
I'm giving up on fancy TV's, cars, and vacations now by putting my disposable income into a 401(k) account for later. Others are blowing their money on short-term trinkets and then complaining that they don't have savings for retirement.
The 99% want theirs now, and then they want mine later.
This is all really just a modern-day replay of Aesop's fable of the Ant and the Grasshopper.
Deferred taxes are bad? how is that?
Not that bad. Do the math. $9,000 reduced by 10% penalty leaves you $8,100. Withheld tax at 20% marginal tax rate leaves you with $6,500.
The 10% penalty is to enforce the discipline of saving for retirement. This isn't supposed to be a rainy-day fund.
Careful. The government would prefer you pull it during your income years.
Rush talked about this today.
I don’t think a government pension is taxed when you earn it...maybe we should go after that first. And no, we are not going to increase the government worker pay when we tax their pension contributions. I call it ‘giving back’.
Might? We'd better hope like hell it would.
Mr. Fred - Your assertion regarding 401(k)’s is woefully lacking in hard data.
Just sayin’ . . .
Again, I ask "What if my 401(k) is in corporate stocks?" Would this plan force me to sell all my corporate stock in order for the cash amount to be turned over to the government for purchase of government bonds?
What would that do to the private sector? What would that do to all the corporations whose stocks are suddenly seized from retirement accounts by the government and sold off for cash?
I have no income years, its all out go years now............................................plus the government demands I take out X amount of money every year so that the day I die, there will be no money left...I have to take out more than I really need, poo on all politicans. we are servants not citizens when we have to do as our masters demand....just hope I don’t die in the hole...oh wait, there is welfare, :O) they didn’t think of that...
Most women suck at math, it is why so many vote for demonrats and do not care (or even understand) the national debt disaster. Plus, end up tens of thousands in credit card debt with no idea how it happened.
Well, I’m in. Down here in Georgia, we’ve always believed that people had the right to rebel against tyranny.
Roll it over into a self-directed IRA.
I think that maybe I did not explain my beliefs well enough. I am in favor of keeping the 401(k): anything that helps me lower my taxes and saves me money is okay for me. However, I think that the average American would be better off being able to pay off his mortgage with pre-tax dollars. There would have to be a limit on the amount of money people could pay because we wouldn’t want to encourage people to buy bigger and bigger houses. But, if people owned their homes, they would be much better off.
Obviously, my monthly budget has little wriggle room in it, but my balance sheet looks better every month.
Another benefit is the ability to borrow from it, and paying it back at low interest rates. I don't recommend it for frivolous stuff, of course, but it means I don't have to go to my banker to be told no for a home improvement project.
They are going after 401Ks and IRAs because that is where the money is - trillions of dollars just waiting to be “invested” by the Federales.
Forget that the money is there, and roll it over to an IRA. Long term, that is the smartest decision (depending on federal shenanigans).
It sounds like you are young, and don't have a large rainy day fund.
IF you chose to cash in the 401(k), do it now. Do not wait until January. You will pay a penalty of $900, which you can treat as just another investment risk. It basically offsets the employer match.
You will pay the 20% in taxes up front, which will help you on your 2012 taxes. File your taxes as close to Jan 16 as you can, which we think will be the first day that the IRS accepts returns.
You will either: 1) get most of your 20% back, or 2) not get whacked by owing taxes on this years’ income.
Try not to spend it if you do pull it out, and use it to start a new rainy day fund if you no longer want to participate in this form of retirement savings.
Well as for age I’m getting up there lol. I’m 49 and I have about 9000.00 in a 401K which I have a 1,700 loan I took out about 4 years ago when I fell ill. Now I have been recently laid off with that outstanding loan. I got my severance lump sum pay of 6000.00 which after paying my rent and bills I have about 4000. So far no check from unemployment even-though I filed already.
I am upset but I try not to think of it but when my father me and my brother inherited 100,000.00 Well all that money is gone since my brother used it up leaving me very little. He used it to buy a lexus with a camera in the back to see who is behind and lived in a high price area yet he has no job. He relied on father’s money to live on. Yep he is an Obama supporter, and now I am making him give money. Right now he can’t help me since he is struggling.
What gets me upset is that if I still had that money I would not be wanting to cash in my 401K. That is why I am considering to do that.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.