Skip to comments.Broken Piggy Bank: 'Leaky' 401(k)s Worry Congress (SEAL Act - Savings Enhancement by Alleviating...)
Posted on 05/20/2011 9:28:19 AM PDT by Libloather
Broken Piggy Bank: 'Leaky' 401(k)s Worry Congress
By ALAN FARNHAM
May 20, 2011
Americans in record numbers are raiding their 401(k)s, depleting their retirement savings to compensate for paychecks and mortgage equity lost to the recession. As employers and savings plan providers struggle to stem the outflow of money, two senators have introduced legislation that would make it both harder for employees to dip into company-sponsored retirement savings and easier to repay their borrowings.
The SEAL Act (Savings Enhancement by Alleviating leakage in 401(k) Savings) introduced by Sens. Herb Kohl, D-Wis., and Mike Enzi, R-Wyo., would reduce to three the number of loans an employee could take against a 401(k). Savers currently can take as many loans as they think they can handle -- or as many as their employer may permit.
The bill would ban products that promote savings depletion, such as debit cards linked to 401(k)s, and it would make it easier for consumers to repay monies borrowed. According to a new study by consultants Aon Hewitt, some 28 percent of active participants in 401(k) plans had an outstanding loan in 2010, up from 22 percent in 2005.
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My 401(k) is my business and not the governments.
Leave the 401ks alone you commie freaks. If I want to spend the whole thing it’s up to me.
The goobermint is just jealous the true owner raided it before they could.
Yeah, the feds want you to keep all that money in your 401K so they can raid it at a later date.
Seriously, they really do think all tax-deferred money belongs to them until the taxes are paid. Early withdrawals have to be a big disruption to the Obama/Bankster plan to buy themselves a few more years.
How about we start by barring the stupid acronyms for the title of new laws. We could name it after me, “Michael’s Law.”
Hess calls cashouts the "most disturbing" part of the problem. They're "long-term scary," she says, in the case of younger workers, who won't be able to rely on pensions. Employers, she thinks, have been doing a good job getting these workers to participate in 401(k)s. "But cashouts are undoing all that good behavior, unwinding all that positive momentum."..... Ann Combs, head of strategic retirement consulting for Vanguard, says that when 401(k) plans were first introduced, the inclusion of a borrowing option was deemed essential to making them attractive. "The thinking was that if you didn't offer access to the money, people would be reluctant to contribute."
Does the mere fact of regarding people 'cashing out' THEIR money as "a problem" suggest an increased likelihood of TPTB ending this problem by seizing all 401ks for say, forced conversion into bonds? For our own good , of course.
Bat-turds. I’ve taken several loans from my own 401K bank over the years...and paid them all back to my account. It is getting to the point where I am almost ready to quit my job and take my money out of the 401k (minus the penalty as I’m under the 59.5 age requirement), rollover what I can to my Roth and put the rest where I, and I alone, control it...before these rats figure out a way to raid them.
It’s not their money and it’s none of their damned business.
How dare the citizens raid their own 401K’s before Congress has a chance to! :)
You nailed it, buddy! They’re planning a raid just like Hugary, Ireland, etc. in the not too distant future. And I was hearing too many acquaintances talking openly about “going Galt” and emptying the piggy bank before they could do it.
There’s a way to get it without the penalty....you just need to roll it to the proper type of account first...
I’m 47 and have tapped mine several times and only paid straight income tax on it....10%
You don’t have to take a (tax) penalty if you roll it into another account. You can convert it to a “self directed” IRA that can be used for ANY investment (property, gold, etc).
Well, by all means, don't keep us in suspense. What type of an account does one have to roll into to get these fabulous advantages?
That would be income tax + 10% penalty, unless it was a Roth and then you’d have to pay only on the earnings.
My particular company does not let employees do the Roth Conversion/rollover unless I’m 59.5 or leave the company...which is why I’m considering the latter...before this corrupt government decides for me..
I talked to my financial adviser about this last night. In short it would put virtually every financial investment company out of business. You REALLY think this is going to happen? Talk of anything like that is simply talk. It hasn’t even made it IN to a committee.
The government wants MORE people to save money, it weans them off the need for SS. In fact, look for the opt-in rule to be changed to a opt-out rule. In other words instead of having to opt-in t a 401k you would be automatically enrolled into one unless you specifically opt OUT of it.
What I see the government doing is mandating a certain percentage of 401K assets to be invested in government securities. All in the name of preservation of capital, of course.
If Herb Kohl likes it, I hate it!!
Ha, who didn’t see this coming. I stopped contributing to my 401k altogether and withdrew what I had, penalty be damned. Now the amount I would’ve put there buys physical silver that goes in my safe. Hey capn’0....try and tax or touch that jerkoff.