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Your Tax-Free Nest Egg May Not Be Tax-Free After All
IBD Editorials ^ | April 23, 2012

Posted on 04/23/2012 4:52:06 PM PDT by Kaslin

Duplicity: More than 30 years ago, lawmakers made a deal with Americans: Set up a retirement nest egg and we'll let you fill it with tax-free money. A financially troubled Washington now plans to break its word.

Nothing brought ordinary Americans into the world of investing like 401(k)s. Named after a subsection of the Internal Revenue Code, these retirement savings accounts have become a wildly popular alternative to traditional employer pensions, and are today owned by a sizeable majority of Americans at or near retirement.

Through 401(k)s, an employee — not the company he or she works for — decides just how aggressive or cautious he wants to be with money set aside for the autumnal years. Employers usually offer a series of stock, bond and money market investment funds, allowing a worker to choose and mix as he or she likes.

Not only would Americans see their own retirement accounts grow as the years passed, but they could rest easy knowing that the interest earned in their 401(k) won't be taxed before withdrawal at retirement time — or, in the case of the after-tax dollars in a Roth 401(k), that their money can be withdrawn tax-free.

But it's not the '80s anymore. It's 2012 and there are trillion-dollar-plus deficits to deal with, more than $15.6 trillion in outstanding government debt, and total U.S. unfunded liabilities of more than $65 trillion. Time for politicians to start looking for new sources of revenue.

No one should be surprised that Uncle Sam's wandering eye has noticed the $18 trillion in 401(k) accounts and other middle-class tax breaks, as the New York Post alerted its readers to over the weekend.

(Excerpt) Read more at news.investors.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: 401k; 401kconfiscation; levinlive; retirement

1 posted on 04/23/2012 4:52:06 PM PDT by Kaslin
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To: Kaslin

gosh who could have seen that coming...!


2 posted on 04/23/2012 4:53:10 PM PDT by Mr. K (If Romney wins the primary, I am writing-in PALIN)
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To: Kaslin

So, I and millions of others will no longer place a portion of our income in IRA.s or 401K’s, and will rush to withdraw what we have there as quickly as possible. That should work out GREAT for the market...... / sarc


3 posted on 04/23/2012 4:55:12 PM PDT by Kozak ("It's not an Election it's a Restraining Order" .....PJ O'Rourke)
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To: Kaslin

So, I and millions of others will no longer place a portion of our income in IRA.s or 401K’s, and will rush to withdraw what we have there as quickly as possible. That should work out GREAT for the market...... / sarc


4 posted on 04/23/2012 4:55:15 PM PDT by Kozak ("It's not an Election it's a Restraining Order" .....PJ O'Rourke)
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To: Kaslin

I’m glad I’m an old fart but I fear for my grandchildren. Maybe I can figure out a way to leave them something without the damn Democrats getting their filthy paws on it.


5 posted on 04/23/2012 4:55:17 PM PDT by Past Your Eyes (You knew the job was dangerous when you took it.)
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To: Kaslin

Actually 401Ks are probably fuelling the stock market bubble. Maybe it’s not such a bad thing to pop it after all. :P


6 posted on 04/23/2012 4:58:21 PM PDT by MetaThought
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To: Kaslin
The 401k was NEVER a Tax-free investment It is a Tax deferred investment. The genius of this is that you pay tax on the money when you retire and you have very little tax deductions (no mortgage interest) so your tax rate goes UP! Nice deal for the IRS, bad deal for the taxpayer.
It is much better to pay tax today and have tax free income later. The Roth IRA does this, at least for now.
7 posted on 04/23/2012 4:59:42 PM PDT by UnRuley1
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To: Kaslin

They should do this right after they slash all government pensions ( except for military). / sarc


8 posted on 04/23/2012 5:00:34 PM PDT by Kozak ("It's not an Election it's a Restraining Order" .....PJ O'Rourke)
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To: Kaslin; SunkenCiv; neverdem

If this happens, a lot of people may pull their money out of their retirement plans. How will that effect the economy and tax receipts?


9 posted on 04/23/2012 5:02:56 PM PDT by Clintonfatigued (A liberal's compassion is limited to the size of other peoples' paychecks)
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To: Kaslin
Eventually they'll be no such thing as retirement. It'll be work till you drop then you get to face the death panels.

In all seriousness for someone in an office type situation working to 70 may be an option, but for those of us who work in construction, retail , food service etc working into a ripe old age may not be an option.

10 posted on 04/23/2012 5:04:13 PM PDT by YankeeReb
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To: Kozak
They should do this right after they slash all government pensions ( except for military). / sarc

Sadly, military pensions are the first ones they'll slash. Why? Simple, the military isn't unionized and they don't (as a rule) vote Democrat.

11 posted on 04/23/2012 5:06:32 PM PDT by YankeeReb
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To: Kaslin

The day they try to pull this is the day Lurker becomes a very, very dangerous man to certain people.


12 posted on 04/23/2012 5:06:35 PM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Past Your Eyes

There is always the good old banking action, i.e., put it in the mattress.


13 posted on 04/23/2012 5:09:51 PM PDT by ProudFossil (" I never did give anyone hell. I just told the truth and they thought it was hell." Harry Truman)
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To: Past Your Eyes
You can leave some funds for your Grandkids, it is called INSURANCE proceeds. No, I don't sell insurance, I do have a life insurance license and have done my homework and have come to the realization that insurance proceeds are not taxable as they are not income, for now. If you have time, get some insurance and name the kids as beneficiaries. Then you don't have to worry about the stock market.

14 posted on 04/23/2012 5:10:51 PM PDT by UnRuley1
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To: Kaslin

Before people rush to say that people will withdraw their 401k’s and tank the market, 401k withdrawals are taxed already and withdrawing now would be pointless. Eliminating the 401k deduction would be negative for certain market segments but might be positive for others. For example royalty trusts would become a royal pain outside of an IRA or 401k and lead to complicated and increased taxes. But people might still be inclined to invest in yield or growth stocks if there is still a somewhat favorable tax treatment.


15 posted on 04/23/2012 5:11:32 PM PDT by palmer (Before reading this post, please send me $2.50)
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To: Lurker

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.


16 posted on 04/23/2012 5:13:31 PM PDT by UnRuley1
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To: Lurker

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.


17 posted on 04/23/2012 5:14:19 PM PDT by UnRuley1
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To: Lurker

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.


18 posted on 04/23/2012 5:14:38 PM PDT by UnRuley1
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To: UnRuley1

Sorry for the multiple posts, I don’t know what happened.


19 posted on 04/23/2012 5:16:17 PM PDT by UnRuley1
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To: YankeeReb
Eventually they'll be no such thing as retirement. It'll be work till you drop then you get to face the death panels.

Totalitarians have many tactics. Plunder and death are their stock and trade. Witness history and current events.

20 posted on 04/23/2012 5:16:45 PM PDT by PGalt
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To: Kaslin

Damn thieves in Washington up to no good again.


21 posted on 04/23/2012 5:20:57 PM PDT by dinodino
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To: UnRuley1
The genius of this is that you pay tax on the money when you retire and you have very little tax deductions (no mortgage interest) so your tax rate goes UP!

And what will the tax rate be 15 to 20 years from now? No one knows.

22 posted on 04/23/2012 5:27:35 PM PDT by Libloather (The epitome of civility.)
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To: UnRuley1
insurance proceeds are not taxable as they are not income, for now.

Those words, "for now", needed some emphasis.

23 posted on 04/23/2012 5:30:07 PM PDT by Graybeard58 (Romney vs. Obama? One of them has to lose, rejoice in that fact, whichever it is.)
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To: Libloather
And what will the tax rate be 15 to 20 years from now? No one knows.

85%

24 posted on 04/23/2012 5:30:13 PM PDT by scooby321 (h tones)
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To: Kaslin; All

This is a Dem idea..and DOA. It will never pass the House


25 posted on 04/23/2012 5:32:32 PM PDT by ken5050 (The ONLY reason to support Mitt: The Mormon Tabernacle Choir will appear at the WH each Christmas)
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To: Lurker

It will trigger Civil War II.


26 posted on 04/23/2012 5:34:15 PM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: Kaslin

Start taxing welfare benefits, EBT’s, food stamps-as-income, etc., etc., instead of trying to buy all those tribal parasite votes with “Whitey’s Money”.


27 posted on 04/23/2012 5:34:56 PM PDT by traditional1 (Don't gotsta worry 'bout no mo'gage, don't gotsta worry 'bout no gas; Obama gonna take care o' me!)
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To: Kozak

Yes. Why would you still invest in them if you are going to be taxed on it from the get go.


28 posted on 04/23/2012 5:35:52 PM PDT by funfan
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To: Kaslin
The Government's REAL thoughts were

OK worker bees - we'll let you work hard and collect some honey into your hives. Once we need it, we will take it.

29 posted on 04/23/2012 5:40:07 PM PDT by PGR88
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To: Kaslin

Golden Rule- those who make the rules, get your gold.

I’d not be surprised if the Roth suddenly becomes taxable ,too.


30 posted on 04/23/2012 5:41:01 PM PDT by TurboZamboni (Looting the future to bribe the present)
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To: Kaslin
The Post also interviewed Urban-Brookings Tax Policy Center co-director William Gale, whose idea of replacing all tax deductions on 401(k)s and IRAs with an 18% credit sent straight into everyone's retirement account is also being considered within Congress.

This statement makes absolutely no sense to me. Does this mean the government gives me a check for 18% of my income?
31 posted on 04/23/2012 5:44:33 PM PDT by microgood
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To: Graybeard58

Laura D’Andrea Tyson is an economic adviser to Obama. She served in the Clinton Administration where she authored an idea to tax Employer Contributions to 401k’s as current income and a retroactive tax of 15% on 401k’s to make up for them not being taxed in the first place. Read “Mrs. Tyson’s Fried Economics” in National Review 1993.

“No Man’s life, liberty, or property is safe while Congress is in session.”....Mark Twain


32 posted on 04/23/2012 5:45:07 PM PDT by TurboZamboni (Looting the future to bribe the present)
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To: Kaslin

For IRAs it’s probably time to buy out your LOUSY, non-contributing partner by converting to a Roth...


33 posted on 04/23/2012 5:48:10 PM PDT by aMorePerfectUnion ("Of two evils, choose neither." -- Charles Spurgeon)
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To: Kaslin

They are not really interested in taxing the funds. We should be relieved if all they wanted was to tax them, and we would gladly pay those taxes. They want the funds themselves. They will take all private retirement accounts, and roll them into Social Security, and then dole them back out at an alarmingly low rate. This is necessary, because it isn’t fair that people who make sacrifices and save their money should have more money then people who don’t save. 51% of the voters agree with them, and besides, it will help save Social Security for everyone. Aren’t you happy for that?


34 posted on 04/23/2012 5:57:20 PM PDT by webheart
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To: Past Your Eyes

I have an account with Bank of Mattress. I jumped on it last spring and got a real bounce out of it. Solved all my tax problems.


35 posted on 04/23/2012 5:57:55 PM PDT by Sacajaweau
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To: Kaslin

The first thread is from Sunday

Feds eye retirement-fund tax to cut $16 trillion-plus deficit (Obama’s war on savers)

http://www.freerepublic.com/focus/f-news/2875052/posts

Fox: Government considering adding taxes 401Ks

http://www.freerepublic.com/focus/f-news/2875401/posts

Congress Coming After Your Retirement Savings Next?

http://video.foxbusiness.com/v/1579478247001/congress-coming-after-your-retirement-savings-next

Is Your Retirement Savings Safe From Uncle Sam?

http://video.foxbusiness.com/v/1579478250001/is-your-retirement-savings-safe-from-uncle-sam


36 posted on 04/23/2012 6:21:52 PM PDT by Whenifhow
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37 posted on 04/23/2012 6:51:05 PM PDT by RedMDer (https://support.woundedwarriorproject.org/default.aspx?tsid=93)
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To: dfwgator

“It will trigger Civil War II.”

Not likely.

There is lots of money in those accounts, but there are not that many people who have a significant amount of money in those accounts.

The majority of people in the US would think it was a great idea to soak the rich some more.


38 posted on 04/23/2012 7:28:55 PM PDT by webstersII
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To: Past Your Eyes
if you can, give them money now, not later...or buy a house with the purpose of bestowing it to them...

they're screwing all the workers by now taking our legacies from us....

years of doing without, not going on huge vacations, and not running up credit cards so you could have all the newest toys and gadgets and cars...

and for what?....so now your little pittance of savings can be obscounded with...

39 posted on 04/23/2012 9:30:08 PM PDT by cherry
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To: UnRuley1
That would really depend on your income bracket now vs. what your projected income bracket would be from income garnered from your IRA nest egg that you can delay until 70.5 years of age.
40 posted on 04/24/2012 12:57:05 AM PDT by Chgogal (WSJ, Coulter, Kristol, Krauthammer, Rove et al., STFU. Thank you.)
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To: TurboZamboni
I’d not be surprised if the Roth suddenly becomes taxable ,too.

Saw that one coming 50 miles away ..... why I never converted. Knew they were "setting them up the Bomb".

41 posted on 04/24/2012 1:57:36 AM PDT by lentulusgracchus
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To: Past Your Eyes

Gold. Or farmland that they can then feed themselves on. Also overseas investments


42 posted on 04/24/2012 2:23:29 AM PDT by Cronos (**Marriage is about commitment, cohabitation is about convenience.**)
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To: Kozak; Kaslin
So, I and millions of others will no longer place a portion of our income in IRA.s or 401K’s, and will rush to withdraw what we have there as quickly as possible.

Exactly! my husband and I were livid when we heard this.

And don't forget the banks...don't want Uncle Sammy knowing how much you got.

First, the bastards stole Social Security
now they want to steal our other retirement.
I think it is time to get down and dirty
and force those progressive bastards to stop sending money overseas!
And funding special interests.
We need to get the lobbyist out of our capital.
When our reps listen to them, they are not listening to us (the same when listening to illegal immigrants).

43 posted on 04/24/2012 5:00:52 AM PDT by beachn4fun (Lock and Load)
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To: Lurker
The day they try to pull this is the day Lurker becomes a very, very dangerous man to certain people.

Look me up
I'll be ready to terminate any who vote for this with extreme prejudice
44 posted on 04/28/2012 1:45:42 PM PDT by jrg
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To: Kaslin; jazusamo; blam; Quix; Alamo-Girl; M. Espinola; whitedog57; stephenjohnbanker; ...
The time to wake up is over. Please watch this video:

The 401k Fallout

Speaks for itself

Video: George Carlin Speaks Out On The Owners of America Warning: Profanity !

45 posted on 06/09/2012 10:59:35 AM PDT by ex-Texan (Ecclesiastes 5:10 - 20)
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Comment #46 Removed by Moderator

To: blam; Quix; Alamo-Girl; M. Espinola; whitedog57; stephenjohnbanker
Better look at this right away:

Italy's National Bank Declares a "Bank Holiday" -- All Transactions Blocked !

All debit cards blocked. Major news media is silent -- Coming here next.

47 posted on 06/11/2012 11:23:38 AM PDT by ex-Texan (Ecclesiastes 5:10 - 20)
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