Your Tax-Free Nest Egg May Not Be Tax-Free After All

IBD Editorials ^ | April 23, 2012

[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withdrawal at retirement time — or, in the case of the after-tax dollars in a Roth 401(k), that their money can be withdrawn tax-free.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.

[lentulusgracchus]

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".

[Cronos]

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

[beachn4fun]

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).

[jrg]

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

[ex-Texan]

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 !

[ex-Texan]

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.