Simple question: 401(k) seizure.....isn't this an ex post facto law?

Me ^ | 11/7/2008 | Me

[Dead Corpse]

So in your view, my money sitting in a bank account isn't mine either. This uses the same contractual obligations, just with slightly different terms.

IOW... you are still wrong. It's still my money. In a 401k, the only part of it that ISN'T my money is the part not met by the contractual terms. If my employer agrees to matching, but on the stipulation that I am to withhold spending it until retirement age, then my portion of my 401k is mine regardless of when I withdraw it. Obama and his Treasury folks have ZERO legal claim to it as it is MINE. If money was deposited pre-tax, then I might have to pay a tax penalty not paid on the original income, but it's STILL MY MONEY.

Once my contractual terms are met, even the other compensation deposited by my employer are MINE. Again, government can have no rightful claim and ownership belongs to ME.

You can try and twist this, but you'll still be wrong...

And why exactly again are you working so hard to defend the very logic the Obamanoids will try and use to get this past a stupid and mind-numbed public?

[trad_anglican]

So in your view, my money sitting in a bank account isn't mine either. This uses the same contractual obligations, just with slightly different terms.

Wrong and wrong. I'm not talking about bank accounts I'm talking about 401k accounts. They're not the same. They may be similar in some aspects but that does not make them the same. If they were the same, then deposits we make to bank accounts would be tax deductible.

In a 401k, the only part of it that ISN'T my money is the part not met by the contractual terms.

Wrong again. Your 401k plan is not a contract between you and your employer, though your agreement to defer receipt of compensation is. But that's only one small part of a 401k plan. Go learn about "constructive receipt" and then we'll talk some more.

And why exactly again are you working so hard to defend the very logic the Obamanoids will try and use to get this past a stupid and mind-numbed public?

I'm not. To the extent I'm defending anything it's the concept that words mean things and that truth and accuracy are important when you are discussing important issues.

[prplhze2000]

The government money will be an IOU. There is no lockbox. It will go into the general fund where the Dems will spend it as they see fit.

[count-your-change]

When I lived in Arizona porperty along the route of a future highway was being seized under eminent domain, nothing new. An idea on how to decide the value of the property was new.
Say I owned an acre of land and it’s value as is was $100,000 and the new highway would slice off 1/2 of it. Do I get $50,000? No, according to a proposal by a state legislator. The 1/2 acre I still owned would be worth more, say $90,000, due to its proximity to the new highway so I should receive only $10,000 for the 1/2 acre seized on the reasoning that I suffered no loss by the taking since I still had a piece of land worth $90,000 plus the $10,000.

I don’t think the idea ever became practice but it shows how anything can be justified and tarted up as “legal”.

[trad_anglican]

The government money will be an IOU. There is no lockbox. It will go into the general fund where the Dems will spend it as they see fit.

I think that's exactly what would happen. I'm not defending the proposal.

[count-your-change]

The feds didn't melt all the gold coins. They could be used to pay foreign governments. The coins available to us today are not necessarily from hold outs of FDR's gold seizure.

[HenpeckedCon]

No, democrats don’t speak Latin.

[Dead Corpse]

A 401k is really little different from investing in any other money market or mutual fund account. The money is still owned by the original investor.

Period.

What you are arguing is like saying the breath in my lungs belongs to the EPA and therefor they have a right to suffocate me. Patently stupid...

[Red in Blue PA]

LOL!

[ponygirl]

It depends on several factors. The most significant is your marginal tax rate since the 401k withdrawal is treated as income. In addition, most would be hit with a 10% early withdrawal penalty.

So, if you’re currently in the 25% marginal tax bracket, 35% of a 401k withdrawal would go to the tax goons. Unless you are in a situation that’s exempt from the the 10% penalty, then it would be 25%.

When I called a financial adviser about this yesterday, this is exactly what he told me. He also mentioned something about 20% of the 401K could be withheld in certain funds until the end of the year. I didn't really understand that part.

He hadn't heard about any of these proposals, which kind of concerns me. (He's a financial planner...doesn't he pay attention to stuff like this?) But in the end, he told me "That's kind of a big hit to take on a rumor." I still haven't decided what to do. If you cash out the 401K, you should do it before the end of THIS year - otherwise, you'll be subjected to Barry's new tax brackets. So you could end up paying 65% to cash in that 401K.

[ponygirl]

I also wonder why no elected republican has stepped forward to explain exactly whythis "confiscation" can't legally happen.

They're too busy down on their knees, giving their new masters a spit shine polish.

[21twelve]

I think one of Obama’s ideas was to let the withdrawal penalty on the 401k’s go away so people could have access to their money in such terrible times of need. Sounds like typical election promises. Plus, I imagine there would be a limit on the withdrawals - enough for some milk, bread and perhaps a tank of gasoline.

And I think he’s too crafty to discuss a 401k confiscation on one hand, and penalty-free withrdrawals on the other.

[javachip]

I think this is the 401k issue being discussed.

The 20% your financial adviser mentioned is a tax withholding, similar to the income tax that gets withheld from your paycheck. It doesn't add to your tax bill on a withdrawal, but goes to pay the tax bill. Hypothetical - Suppose someone in a 25% tax bracket cashed out a $100,000 401k. With the 10% penalty, they would owe $35,000 in taxes. They would get $80,000 and $20,000 would be withheld. Come tax time, they would owe another $15,000 on top of the $20,000 withheld to pay off the $35,000 obligation. They would net $65,000; $100k - $20k - $15k.

The 20% withholding becomes a serious issue when transferring a 401k to an IRA or another 401k plan. If you take possession of the money, 20% gets withheld regardless of your plans. The 20% is refundable at tax time after you've deposited the money in a new qualified plan. But, in the same example above, our friend has $100k in a 401k, takes it out with the intention of putting it in another qualified plan. But the check is only for $80k. Our friend has to come up the other $20k to be able to deposit $100k in the new account or pay taxes and penalties on the $20k as an early withdrawal. You can avoid the 20% by having the current custodian transfer the money directly to the new custodian. IMHO, your financial adviser should have made that clear for you.

I'm not a financial adviser can't tell you what your should do. FWIW, I don't plan on cashing out my 401k based on this rumor.