Its not a taking if they follow Dr. Ghilarducci’s plan and give you a nice valuation for your 401k at August 08 levels as well as a tax credit. They aren’t going to seize the 401k plan per se, what they will do is remove the tax deferment for contributions and try to entice people to transfer their funds to GRA’s with high valuations. Employers will discontinue 401k matches and employees will see their income taxes rise because it will be figured into their ordinary income.
No ex post facto factor here.
In such a scenario, employers might discontinue 401K matches, but I seriously doubt that employees would see their incomes rise, and if they do, it would not be an equivalent amount since the match has tax advantages for the employer while the wages would not.
Finally, someone on this thread who actually understands how this will be imposed.
So what is the tax bite for cashing in your 401K? My son says it will wash out to be 40%, I thought it was more like 15.
why would they give you a tax credit? if a 401k is pre-tax, couldn’t they get away with giving you a social security credit? on paper it would appear to solve teh social security “crisis,” as well as to appear to be not taking away anything.
although it would only be a temporary “fix” dems could talk it up as having been solved, and later be able to find a way to blame the renewed crisis on republicans when they retake control.
You forgot to add that the financial services industry will be devastated as a result. Without a tax incentive for future contributions or employer matches, cash inflows will dry up. And then there is the matter of the treatment of other types of qualified retirement plans (403b’s 401a’s, 457 plans, etc.). What about ERISA provisions for both defined benefit and defined contributions - how will these be affected? And who is going to pay for the difference between present valuation and the GRA guarantee? Well, that’s an easy one: we all are.