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Posted on 10/16/2008 8:32:17 PM PDT by Keyes2000mt
Powerful House Democrats are eyeing proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at The New School for Social Research in New York, contains elements that are being considered. She testified last week before Mr. Miller's Education and Labor Committee on her proposal.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at The New School for Social Research in New York, contains elements that are being considered. She testified last week before Mr. Miller's Education and Labor Committee on her proposal.
"The savings rate isn't going up for the investment of $80 billion," he said. "We have to start to think about ... whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should."
"From where I sit that's just crazy," said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, N.Y. "A lot of people contribute to their 401(k)s because of the match of the em-ployer," he said. Mr. Belluardo's firm does not manage assets directly.
Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined contribution plans, he said.
"If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets," Mr. Belluardo said.
"This is a battle between liberalism and conservatism," said Christopher Van Slyke, a partner in the La Jolla, Calif., advisory firm Trovena LLC, which manages $400 million. "People are afraid because their accounts are seeing some volatility, so Democrats will seize on the opportunity to attack a program where investors control their own destiny," he said.
The Profit Sharing/ 401(k) Council of America in Chicago, which represents employers that sponsor defined contribution plans, is "staunchly committed to keeping the employee benefit system in American voluntary," said Ed Ferrigno, vice president in the Washington office.
"Some of the tenor [of the hearing last week] that the entire system should be based on the activities of the markets in the last 90 days is not the way to judge the system," he said.
No legislative proposals have been introduced and Congress is out of session until next year.
However, most political observers believe that Democrats are poised to gain seats in both the House and the Senate, so comments made by the mostly Democratic members who attended the hearing could be a harbinger of things to come.
ADVICE AT ISSUE
In addition to tax breaks for 401(k)s, the issue of allowing investment advisers to provide advice for 401(k) plans was also addressed at the hearing. Rep. Robert Andrews, D-N.J., was critical of Department of Labor proposals made in August that would allow advisers to give individual advice if the advice was generated using a computer model.
Mr. Andrews characterized the proposals as "loopholes" and said that investment advice should not be given by advisers who have a direct interest in the sale of financial products.
The Pension Protection Act of 2006 contains provisions making it easier for investment advisers to give individualized counseling to 401(k) holders.
"In retrospect that doesn't seem like such a good idea to me," Mr. Andrews said. "This is an issue I think we have to revisit. I frankly think that the compromise we struck in 2006 is not terribly workable or wise," he said.
Last Thursday, the Department of Labor hastily scheduled a public hearing on the issue in Washington for Oct. 21.
The agency does not frequently hold public hearings on its proposals.
There soon will be a run on safes and mattresses....
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Ping!
I caught it too. Another case of democrats insisting on playing God.
Excellent post. I think you need to forward it to everyone you know.
If it were mine, I would.
oh, please, Dems, do that!!!
The middle class would hate you forever. :-)
that’s just
evil.
Ah-so... I thought you were from the future or something!
“I want to spend OUR nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ms. Ghilarducci said.
So, deferred taxes on 401(k) contributions and earnings are actually part of “OUR NATION’S” dollar for retirement security. They don’t belong to the companies and employees who put the dollars in the 401(k)s.
As several have said, that this sort of proposal is being seriously entertained now in Dem. controlled congressional committees should be publicized far and wide.
If people keep putting money into their 401(k)s and their IRAs, they won’t be dependent on Socialist Security — and that is exactly what it is, security for the socialists. So the alternative methods of funding your retirement hve to be taxed into oblivion. Liberalism cannot function without large numbers of dependent people.
Post election, the party of Bill Ayers must have a long list of little surprises for us.
"Change and Sacrifice"
.
The bigger mystery is why people vote for them.
I remember seeing a Brooking Institute meeting on C-Span during the time Bush was trying to save the USA and privitize SS. They were hawking a private plan on TOP of SS. Except it would be mandatory and of coarse it would be wealth re-distribution aspect like SS and the .gov would also kick in some money for those on the low end. I bet this is something like that. I am so mad right now. I do not want to finance another persons retirement but my own. Good grief. Are they going to bleed us to death until we have to revolt!!!
Screw with the “rich” is one thing, screw with the “Average Joe’s 401k” is another thing. Any bozo who tries to take away the tax breaks on 401k might as well sign their own political death warrent.
Wall Street is collapsing out of fear these sc*mbags will have unlimited power in a democrat/Obama victory.
If taxing your 401K retirement fund is any indication, it will be a long way to the bottom for Wall Street.
Conversely, a McCain victory would produce a 5000+ point gain in the Dow before the end of the year.
After govt encourages people to save for their own retirements, now they want to raid their private retirement money they have saved.
Fvck all the democrats. They can all burn in hell. Friggin bastards.
It might not be so long....
Dang, taxing 401(k)’s sounds idiotic.
People investing in 401(k)’s is something that has a buffering effect on market downturns. If the incentive to invest is gone, those downturns figure to be deeper and longer...
No, they just need to adjust the basis for the investments now so they can tax the gains once the market comes back up. You have to be patriotic to want to spread the wealth around.
BTW, you can borrow up to half of your vested 401(k) up to $50k. The payment principle and interest go back into your account. Buy a car and make payments back to your retirement instead of bank profits. Buy or improve a house. Go to college. Start a business. Invest in things your 401(k) does not offer. So with 50k of my money and 50k of corporate match in the 401(k), I can borrow out all of my money to use elsewhere and still have the match in the 401(k).
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