Posted on 10/09/2008 11:25:48 PM PDT by Fred
A wide range of sweeping changes to the 401(k) system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans.
Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.
This was suggested by the chairman of the House Committee on Education and Labor.
“With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,” Rep. George Miller, D-Calif., said.
“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings.
With savings rates going down, “what do we have to start to think about in Congress of whether or not we want to continue and invest that $80 billion for a policy that is not generating what we … say it should?” Mr. Miller said.
Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.
When workers collected Social Security, the guaranteed retirement account would pay an inflation-adjusted annuity under her plan.
“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.
That simply results in transferring money from taxed savings accounts to untaxed accounts, she said.
“If we implement automatic [individual retirement accounts] or if we expand the 401(k) system, all we’re doing is adding to this inefficiency,” Ms. Ghilarducci said.
Rep. Robert Andrews, D-N.J., raised the issue of which investment advisers are allowed to offer workers investment advice.
The Department of Labor is considering “loopholes” that would allow advisers to offer “conflicted investment advice if the advisers work for subsidiaries of financial services companies that sell the investments,” he said.
With American workers facing $2 trillion in losses from retirement plans over the past year and Democrats expected to gain seats in the House and the Senate, actions being contemplated by the committee are an important harbinger of what could come out of Congress next year.
Maybe some Kool-Aid drinkers will have second thoughts if they learn about this proposal. The Libs are going to take voter angst as an endorsment of their crackpot economic ideas and end up back in the minority for a long, long time.
I'm so glad you brought that up. Have you noticed there aren't as many of those "Send a message" posters these days? As recently as August I seemed to find a couple each time I came here.
I wish those "send a messagers" from 2006 would start a thread proudly proclaiming they didn't vote in 2006 to send a message. You'd think they'd be so proud of their message they'd wanna crow about it.
“They just can’t do that” is wishful thinking. They can and they will, if the history of other countries is any guide. Insofar as it would constrain the Federal government on economic issues, the Constitution is a dead letter.
I guess it’s time to withdraw the money from the 401K and head somewhere off the electric grid.
Hubby and I are convinced they will find a way to tax our Roths when we get to retirement. There is no way they are going to let us “steal” that money from their wealth redistribution program.
The Democrats have been eyeing this juicy untouchable revenue for decades and are constantly scheming on how get their slimy hands on it.
Imagine what this will further do to the Stock Market? With Obama’s 20% (making it 30%) increased tax on Capital Gains and this in top of it, Wall Street will become a ghost town.
One thing these Socialists also all have in common is, when they plan these raids on the Constitution, they act as though we do not exist or matter. That is, WE, the ones who earn the money that drives this economy and country.
It’s as though every thing we have or earn is their property and they have the right to freely take what they need.
Damn. That means they can control us more. I mean that Social Security is paying pretty good. Bastards.
“I wonder if those that are tearing our country apart have considered that when justice comes for them, it will give no quarter.”
They are in for a rude awakening.
my wife and myself have done without the expensive crap, the fancy cars and vacations, the extra nice clothes, and put our money away so we could retire in comfort. We have been doing this for 25 years. Now, some blowhard piece of human excrement wants me to give it to them to manage!!! This will be a call to arms....
we are here, in this position, today, because of the “I’m taking my toys and going home” crowd that refused to do THEIR DUTY as a citizen of this country, and did not drag their collective sorry asses to the poll to cast their ballot....i spit upon all of you that “taught me a lesson”
Norman Hsu (remember him?) was a Trustee at the New School.
I thought I had read or heard something similar early this year. To stave off exactly what some here are thinking about doing. Don’t know if it passed or not though.
ditto.
Sadly, there is a good chance you are right.
I am so close to being all in ROTH, this is going to be a good year to do a big xfer from my 401k into my ROTH(bad work year)...am so close....I have been working toward this for 10 years now because I knew this was coming..
Preach it! PREACH IT, BROTHER!
HA. The tax shelter is one of the FEW reasons why I invest in a 401K. If that is eliminated, I'm sure 90% of "high income" earners will take their money and run. I'd gladly pay the penalties and move it elsewhere.
The recent proposals toward "fixing" this g**damn mess are FREAKIN RIDICULOUS.
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