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Fiscal Cliff: Why Congress Might Have to Mess with the 401(k)
Time ^ | 11/29/12 | Dan Kadlec

Posted on 11/29/2012 11:20:58 AM PST by Perdogg

One of the earliest fears about tax-favored savings accounts like IRAs and 401(k) plans was that when this pool of savings grew large enough Congress would not be able to resist tapping it to help solve the nation’s debt problems. We’re about to find out if those fears—persistent for decades—have been justified.

Everything including the sacred mortgage deduction is on the table as lawmakers wrestle with the fiscal cliff, a year-end avalanche of scheduled spending cuts and tax increases. With a combined $10 trillion sitting in IRAs and 401(k) plans, retirement accounts make a juicy target. Some of this money has never been taxed, and under current law never will be.

(Excerpt) Read more at business.time.com ...


TOPICS: Breaking News; Business/Economy; News/Current Events; Politics/Elections
KEYWORDS: 0bamanation; 112th; 401k; apieceoftheaction; bho44; corruptbastards; debt; fairness; ghilarducci; nationalization; pension; pigford3; redistribution; retirement; savings; spending; spreadthewealth; taxandspend; theft; waivethis
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To: abb
You “own” a house? Says what? That piece of paper on file down at the county clerk’s office? If they can expropriate 401k’s or IRA’s, they can disappear that deed on file that is “proof” of your ownership.

I understand what you say and I also agree that I don't really own it because if I don't pay annual taxes, they can take it away. I do hols a hard copy of the Deed of Trust which at leas makes it "mine" to live in and to defend - vigorously...

151 posted on 11/30/2012 3:03:31 AM PST by trebb (Allies no longer trust us. Enemies no longer fear us.)
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To: 1010RD
The pro-debt tax policies need to end, asap.

Agreed, but even more important is the assured debt spending policies...

152 posted on 11/30/2012 3:05:15 AM PST by trebb (Allies no longer trust us. Enemies no longer fear us.)
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To: sickoflibs
I see you made up your own name, They are called 401Ks and Roth IRAs, there is NO Roth 401K. That is a name you made up.

Do a search on Roth 401k. Or, you can just click this link:

http://en.wikipedia.org/wiki/Roth_401(k)

You really should do a bit of research before you accuse someone of making something up, ***wipe.

153 posted on 11/30/2012 5:33:23 AM PST by justlurking (tagline removed, as demanded by Admin Moderator)
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To: Political Junkie Too

“How would this actually work? “-PJ2

The government “guarantees” the principal in the account.

When the value of the stocks or mutual funds falls below that guaranteed level, which would be triggered later by the program itself, the guarantee kicks in. When an individual converts to the guarantee amount, the stock ownership is transferred to the fedgov. Individuals that accept the transfer earlier, could get a higher guarantee level.

This will be much easier than the confiscation of gold.


154 posted on 11/30/2012 6:30:10 AM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: PeterPrinciple

Taxes are paid at the time the money is withdrawn from the 401(k), which can happen without penalty after the age of 65. The theory has been that when a person is retired, he/she is automatically at a lower income tax bracket than when working and contributing. This has been the reason why it has been such an attractive way to save. In addition, many companies contribute to their employees’ accounts if an employee’s savings reaches a certain level.


155 posted on 11/30/2012 6:54:25 AM PST by nanetteclaret (Unreconstructed Catholic Texan)
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To: Perdogg

I honestly can’t see how there would be any support for this, especially in the House. 401k plans are designed for middle income wage earners and have caps especially designed so they don’t treat high wage earners more favorably. The bad PR this would generate would be insurmountable by anyone who comes out and messes with these plans.


156 posted on 11/30/2012 7:02:24 AM PST by CityCenter (Compromise is the welcome mat to deception.)
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To: DoughtyOne

Somebodys gotta pay for deese Obama phones.


157 posted on 11/30/2012 7:09:20 AM PST by catfish1957 (My dream for hope and change is to see the punk POTUS in prison for treason)
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To: sodpoodle

This is what we get when we allow 47% of the dregs to vote themselves more and more money from the 52% of the earners who created it.


158 posted on 11/30/2012 7:22:50 AM PST by Fedupwithit (You gave him what he wanted. I gave him what he needed.)
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To: sodpoodle

This is what we get when we allow 47% of the dregs to vote themselves more and more money from the 53% of the earners who created it.


159 posted on 11/30/2012 7:23:09 AM PST by Fedupwithit (You gave him what he wanted. I gave him what he needed.)
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To: sodpoodle

Recently, O’Reilly interviewed communist toady Mark LaMont Hill about the current churn surrounding a tax on wealth. The toady literally was licking his lips at the very thought.

O’Reilly kept hammering him on how such a thing would be done (Bill maintained such a system was impossible) but the toady kept repeating that one could use percentages to do “the fair (spit) thing”.


160 posted on 11/30/2012 7:29:13 AM PST by Darnright ("I don't trust liberals, I trust conservatives." - Lucius Annaeus Seneca)
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To: Triple
When an individual converts to the guarantee amount, the stock ownership is transferred to the fedgov. 

Then that confirms my first point that this would really by a back-door federal government takeover of many public corporations?

-PJ

161 posted on 11/30/2012 8:36:44 AM PST by Political Junkie Too (If you are the Posterity of We the People, then you are a Natural Born Citizen.)
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To: catfish1957

What’s that? Just a second, my Obama phone er mobile phone is ringing... /s LOL

I hear ya.


162 posted on 11/30/2012 8:37:18 AM PST by DoughtyOne (Hurricane Sandy..., a week later and over 60 million Americans still didn't have power.)
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I have a question. I am a state employee with a defined contribution plan with TIAA-CREF. It is partially funded by my employer. My contributions are mandatory and I cannot borrow against it.

How the heck would I get my money out of this thing if the SHTF? I don’t see how unless TIAA-CREF and my employer changed the rules on the plan as the topic was being debated. And who’s to say that there wouldn’t be some kind of look-back provision so that if you took out your money within a year of the government taking it, and weren’t actually retired, you’d have to pay it back?

From a financial sustainability perspective, why would TIAA-CREF, Fidelity, or any of the funds just hand over money? Yeah, it’s not theirs, but what happens to these businesses? I don’t think these businesses are going to stand for it, but I’ve been wrong before.


163 posted on 11/30/2012 10:47:24 AM PST by radiohead (Taxmaggeddon - are you ready?)
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To: Political Junkie Too

That would one of the potential outcomes...

Another would have the fedgov sell the shares in the market (depressing the price) in a controlled fashion - Like GM / AIG.

There is *nothing* good that comes out of this program in the end, unless you like socialism/fascism.


164 posted on 11/30/2012 11:09:51 AM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: Triple
Another would have the fedgov sell the shares in the market (depressing the price) in a controlled fashion - Like GM / AIG.

Those companies were already in ruins.

This proposal would kill the DOW. What would happen to healthy blue-chip companies that are relying on those stock values for their major capital projects?

These corporations would suddenly find themselves with under-water projects and no shareholder value to underpin them because of forced sell-offs at depressed prices.

The federal government will end up creating new GM's and AIG's overnight.

And who would buy back these stocks? Somebody has to be a buyer if the government is forcing 401(k) holders into selling. Would people be forced to sell their stock assets in 401(k)'s, only to buy them back at a lower price outside of a 401(k) structure?

This appears to be no different than when the Nazi's in 1930's Germany forced the Jews to sell their businesses at bargain prices or else face outright seizure.

-PJ

165 posted on 11/30/2012 12:31:04 PM PST by Political Junkie Too (If you are the Posterity of We the People, then you are a Natural Born Citizen.)
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To: GSP.FAN

Mark Levine replayed his interview with the complete cypher moron “economist” woman from the New School (lib commie outfit). The interview is hilarious, conducted in 2008, and she did not know who Levine was.

It worth a listen. Go to Levine’s site and playback yesterday’s show. The woman has no clue, and thinks this will be “Better” for “the people”. Without their choice of course, like all socialism— theft.


166 posted on 11/30/2012 1:09:56 PM PST by John S Mosby (Sic Semper Tyrannis)
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To: John S Mosby

You wouldn’t happen to know which hour of the show it is, do you?


167 posted on 11/30/2012 1:11:50 PM PST by NeoCaveman (SMOD 2012)
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To: CityCenter

That’s all very well and true. However, in the socialist mind ANYONE with more than money their target handout group (and contiually overuse the concept of “class”, like middle class, the lower class, etc.) is subject to “fairness”.

Two things required: the attitude of “anointment” of holier than thou , and the concept that MONEY belongs to the government— all money and all income. Which is completely false and central to socialism.


168 posted on 11/30/2012 1:16:20 PM PST by John S Mosby (Sic Semper Tyrannis)
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To: Reddy

The grasshoppers are coming after the ants— Aesop’s Fable come to life.


169 posted on 11/30/2012 1:21:21 PM PST by John S Mosby (Sic Semper Tyrannis)
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To: NeoCaveman

He did it in the first two segments. Then at bottom of the hour (show is 6-9pm, so this would be 8:30) he did a live book promo interview with Dick Morris on his book “Here comes the Black Helicopters” think it’s called.

But sure it was in first hour then part of the second-— his laughter is worth it, as in the original interview the moron woman didn’t know he was insulting her. God save us from these meddling aholes of “fairness”.


170 posted on 11/30/2012 1:35:25 PM PST by John S Mosby (Sic Semper Tyrannis)
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To: DonaldC

To be paid once a year? Quarterly?
I like the fair tax. Everything but food has a fixed rate.
10% sounds fair but the feds would probably want 25%
Maybe settle for 15%


171 posted on 11/30/2012 1:52:21 PM PST by winodog (Thank you Jesus for the calm in my life)
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To: John S Mosby

Yeah i heard it yesterday and she had no clue he was playing with her.


172 posted on 11/30/2012 2:08:16 PM PST by GSP.FAN (Some days, it's not even worth chewing through the restraints.)
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To: Political Junkie Too

I agree with your points.

The Govt still owns AIG shares, I think.


173 posted on 11/30/2012 2:54:26 PM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: PeterPrinciple

“Even if they take over the retirement plans, just who exactly is going to buy all the stocks and bonds?”

If I understood Rush yesterday, part of it is that all further contributions MUST buy at least 5% in bonds.


174 posted on 11/30/2012 4:38:40 PM PST by Wisconsinlady ("When injustice becomes law, then resistance becomes duty." Thomas Jefferson)
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To: DoughtyOne

Well, I don’t trust the scumbags, liars and thieves in Congress. They are capable of anything.

But in this current proposal, the government isn’t proposing to “take over” anything. They just want you and me to be able to contributes LESS to a tax-deferred retirement account, because they want tax money now.

Pension plans are tougher for them to get money from now, but they could find a way to limit corporate tax savings. But pensions are mostly disappearing in the corporate world. 9 times out of 10, if I meet someone who still has a pension, they’re a government worker of some sort.


175 posted on 11/30/2012 6:08:18 PM PST by Choose Ye This Day (There's no shame in attacking a criminal's bean bag. -- Ron Swanson)
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To: Choose Ye This Day

Thanks for the response. To be honest, I’d be surprised if you could find one in ten with non-government retirement plans.

At any rather, I appreciate the comments. Take care.


176 posted on 11/30/2012 6:47:19 PM PST by DoughtyOne (Hurricane Sandy..., a week later and over 60 million Americans still didn't have power.)
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To: BobL

“Yes and no. If we punish the Blue State voters that got Obama re-elected, that will be sweet justice. The base of the Republican Party, like the man who I was replying to, get very little benefit from the Mortgage Debt Loophole, as they simply don’t make $200k per year, and generally have enough kids to knock their taxes way down without it.”

By that argument The house republican(assuming anyone willing to listen to them. Should be claiming that the Democrats don’t want to tax the “rich” because they don’t want to close the tax loopholes thou which the so called Rich avoid taxes.

The democrats are just frauds.


177 posted on 11/30/2012 9:15:05 PM PST by Monorprise
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To: GeronL

I believe they will freeze withdrawals when they decide to confiscate them.

I cashed out half in FY 11 and half in FY12 to stay ahead of them.


178 posted on 12/01/2012 6:59:30 AM PST by FrogMom (Chicken Little is coming, and he's right!)
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To: EQAndyBuzz

Perhaps Romney should have mentioned some of these issues, and perhaps the Senate Republicans could be shouting it from the rooftops. Funny, I don’t hear anything.


179 posted on 12/01/2012 7:59:52 AM PST by SusaninOhio
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To: Perdogg
The 3 biggest lies:
1)Really, it won't hurt a bit,
2)Honest, I would never...,
3)Really, I promise it will be OK...
But just give me the keys to your 401K anyway...
180 posted on 12/01/2012 1:20:01 PM PST by Stayfree
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To: PeterPrinciple
"and under current law never will be (taxed)."

"I am willing to be corrected but that is a lie."

You are correct. It is a lie.

Also, tax deferred retirement savings are subject to taxation when passed on to a non-spouse beneficiary in death.

181 posted on 12/01/2012 1:44:59 PM PST by magellan
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To: Milton Miteybad
This article is laying the ground work. Note the trotting out of the old 80/20 rule:

"The Tax Policy Center in Washington has found that about 80% of retirement savings benefits flow to the top 20% of earners".

This is non surprise, because higher earners can afford to save more, and are more likely to understand the concept of saving for retirement tax deferred.

I have a friend with a lucrative union pension. He thinks 401k's are something only rich CEOs get, and that it allows them to save an unlimited amount of money tax free.

The number of people who believe this, along with those who currently have access to 401k's and perhaps even contribute to 401k's but think "The Rich" get bigger and better 401k's is large enough for Obama for get away with confiscating a portion of 401k's.

And make no mistake, he will not go after Federal Government Employee TSPs, since Federal Government Unions are a big contributor to Obama.

182 posted on 12/01/2012 1:52:09 PM PST by magellan
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To: Perdogg

Boy, that would be unpopular. And dumb.


183 posted on 12/01/2012 1:56:27 PM PST by Tau Food (Never give a sword to a man who can't dance.)
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To: trebb

You live where housing is cheap. In much of the country the mortgage deduction is huge—and yes, more huge for the upper-middle class.


184 posted on 12/02/2012 4:35:22 AM PST by 9YearLurker
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To: BobL
“Most “upper middle class” people don’t get any deductions because they have to pay the AMT.”

I guess it depends on the specifics, but the AMT Patch, as they call it, manages to exempt most upper middle class people. But yea, you can still get tripped up if you have, say, $150k income, high property and state income taxes, and 6 kids. You may well wind up having to pay 10% or so in federal income taxes.

Dude, you really don't know what the heck you are talking about.

185 posted on 12/02/2012 8:42:29 AM PST by FreeReign
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To: FreeReign

Seems to me that if you make $150k, then write off $50k (or split it with tax credits for the kids), that you wind up paying $17k in federal income tax, which is about 11%.

Seems to me that you should get a better accountant for next year.


186 posted on 12/02/2012 11:18:17 AM PST by BobL (You can live each day only once. You can waste a few, but don't waste too many.)
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To: Perdogg

Clue to fools after pension savings - Without a job one cannot say a damn thing!!!


187 posted on 12/02/2012 9:05:23 PM PST by Fred (http://thebubblefilm.com/)
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To: Perdogg
(TIME Article)
when this pool of savings grew large enough Congress would not be able to resist tapping it to help solve the nation’s debt problems....

Liar Kadlec! Larval, belly-crawling, Left-wing maggot journoliar -- "Congress" my ass, this is all your boy Barky's crap; he, not Congress, has been working on this for three years at least.

And yes, the sum at risk is $17 trillion for IRA's, Keoughs, 401(k)'s, and other tax-deferred savings accounts.

188 posted on 12/03/2012 4:00:06 AM PST by lentulusgracchus (Hanoi toy, McCain's their boy. (Hat tip to FReeper |neverdem|.))
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To: Perdogg

Communist Obamanation File.


189 posted on 12/03/2012 7:03:55 AM PST by Graewoulf ((Traitor John Roberts' Obama"care" violates Sherman Anti-Trust Law, AND the U.S. Constitution.))
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To: ctdonath2
As will our polypragmatons.

Wow .... new coinages in Greek on FR! But .... shouldn't that be polypragmatistai? Or maybe polymathetai or polypraktikomathetai?

(Those are all nominative plurals, and masculine 1st-declension nouns.) 8p

190 posted on 12/03/2012 9:51:07 AM PST by lentulusgracchus (Hanoi toy, McCain's their boy. (Hat tip to FReeper |neverdem|.))
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To: lentulusgracchus
Not new. Credit Lindsey Cooper, daughter of Jeff Cooper, father of modern handgunning. A marvelous term: polypragmonocracy, "government by busybodies".
191 posted on 12/03/2012 10:13:56 AM PST by ctdonath2 ($1 meals: http://abuckaplate.blogspot.com)
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To: PeterPrinciple

In a Roth IRA, you are taxed on money you put in, but if the money you put in makes money, then that money is not taxed when you pull it out.

Ok, you earn 150 dollars, pay income tax, get 100 dollars and put it in a Roth. The 100 dollars invested in apple goes way up to 600 dollars. You get to withdraw 600 dollars tax free when you retire. Of course if you invested your roth in the old GM, and when it went to zero, you could not even use the 100 dollars loss as any kind of deduction or offset either.


192 posted on 12/03/2012 11:08:35 AM PST by staytrue
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To: Milton Miteybad

In a roth IRA, you get no deduction for contributing but all gains in a roth are not taxed ever.

Unfortunately, all loses in a roth are not deductible or available for offset either.


193 posted on 12/03/2012 11:14:03 AM PST by staytrue
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To: grumpygresh

“If 401k accounts are to be frozen, it will probably occur under the pretext of a crisis. But the crisis would have to be a real crisis like a major financial collapse or war. Freezing 401k accunts would likely result in a run by the public on all other accounts including bank accounts, stocks, bonds which would cause a crash and liely a freeze on these accounts as well.
Therefore, if the government is to do something like this, they will need to act suddenly, shut down the internet, censor the media and be ready to impose martial law where needed.
It is more likely that they will try out some very innocous seeming transition to tax deferred treasuries and gradually withdrawal the tax deferred status of 401ks and similar pension plans”

Pretty good reasoning.

The alternative is to immediately end any tax advantage to these accounts so you pay tax regardless of whether they are 401k or plain jane stock account.


194 posted on 12/03/2012 11:22:55 AM PST by staytrue
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To: Political Junkie Too
This appears to be no different than when the Nazi's in 1930's Germany forced the Jews to sell their businesses at bargain prices or else face outright seizure.

It also happened to the Jap-Americans in 1942. They were given 2 weeks to sell everything before going off to camp. Needless to say, the prices they got were less than optimal.

195 posted on 12/03/2012 11:40:37 AM PST by staytrue
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To: Perdogg

All they have to do is make it taxable .... retro-active.


196 posted on 12/04/2012 4:58:16 PM PST by Terry Mross (I haven't watched the news since the election. Someone ping me if anything big happens.)
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To: Tzimisce
All those people saving for all those years,but still we voted for obama, nothing they can do now,
197 posted on 12/04/2012 8:12:53 PM PST by primrose (PRIMROSE)
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