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Don't Do It! (Cashing Out 401ks)Monday, November 9. 2009 Posted by Karl Denninger in Consumer at 08:44 Grrrrr.... As the last of his severance pay dwindled away in March, Brad Cleghorn of northwest suburban Marengo cashed out his 401(k) plan in order to pay his mortgage and feed his family. Cleghorn is not alone. A Hewitt Associates study shows that 46 percent of workers with 401(k) plans who lost or switched jobs cashed the plans in, a trend that could lead to serious problems when younger generations of people working today reach retirement. That's not the real problem folks. Let...

It is well known that during the nation’s gale-force recession, many older Americans who dreamed of retirement continued to work, often because their 401(k)’s had plunged in value. In fact, there are more Americans 65 and older in the job market today than at any time in history, 6.6 million, compared with 4.1 million in 2001

BOSTON (MarketWatch) -- We're No. 6! OK, so it's not really something worth boasting about, but at least the U.S. can claim its retirement-income system is better than at least five others, according to a first-of-its-kind study ranking the retirement-income systems of 11 countries. The Melbourne Mercer Global Pension Index measures countries based on the adequacy, sustainability and integrity of their public and private pension systems. The Netherlands topped the rankings, followed by Australia, Sweden, Canada, the U.K. and the U.S. Chile was No. 7 on the list, followed by Singapore, Germany, China and Japan. Adequacy refers to whether projected...

Has anyone here completed the transfer as noted above, e.g. transferred their 401K or 403b funds to an annuity with an insurance company, avoiding tax? If yes, I would think that doing that now would be bad timing, given the low rate environment, correct? Any thoughts on this subject would be appreciated. I'm starting to look into options - thinking - fixed-rate for life - joint lives annuity.

Unused Vacation? It May Pay by Laura Saunders Tuesday, September 29, 2009 Taking vacation pays dividends -- especially if your company allows you to put unused vacation or sick-leave days into your 401(k) or profit-sharing plan. To encourage savings, the Obama administration recently blessed such transfers. While companies may have to amend their benefit plans to allow it, the administration hopes firms will do so. "We tried to build in as much flexibility as possible to make it attractive," says Mark Iwry, a senior Treasury official. The techniques are available for use with all qualified plans, which include 401(k), Keogh...

Note: The following text is a quote: THE BRIEFING ROOM THE WHITE HOUSE Office of the Press Secretary ___________________________________________________________________________ For Immediate Release September 5, 2009 WEEKLY ADDRESS: President Obama Announces New Initiatives for Retirement Savings WASHINGTON – In this week’s address, President Barack Obama will announce new steps to make it easier for American families to save for retirement. These new initiatives will complement the president’s major legislative proposals to boost participation in IRAs and match retirement savings. The new initiatives will: Expand opportunities for automatic enrollment in 401(k) and other retirement savings plans, Make it easier for more than...

The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May. “We’ve already lost 81 this year,” he told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.” Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank. “Government money has propped up the very...

Another result of deflation: Next year, Americans may not be allowed to stash as many dollars in their company 401(k)s or in retirement plans for the self-employed...But when it comes to private pension and retirement savings plans, there's no prohibition against giving contribution limits a deflationary haircut. It isn't clear whether the Internal Revenue Service will in fact lower 401(k) contribution limits, says Mercer consultant Bill McClain. "The law is gray,'' he says.

Congress may confiscate every state pension fund into the bankrupt social security system. Indications that this strategy is being discussed in Washington have come in to us from several sources over the last few days. Tonight, a correspondent who has just come home from a Tea Party Townhall Meeting in Salado, Texas with US Representative John Carter (R-Round Rock) issued the warning. She said, "Representative Carter informed the crowd that talk has been bandied about Congress to appropriate every state's pension plans into the bankrupt Social Security System." She is absolutely 100% sure that she understood him correctly. Dear readers,...

News flash to all the drones out there who voted to elect the community-organizer-in-chief: you will reap what you have sown. Socialist tyrants always promise to lift everyone up to a higher level in order to achieve “equality,” but reality suggests something very different. When they have finished with their social engineering and their economic tinkering, the net result is always to drag everyone down to poverty or, at best, mediocrity, and the Obama regime will be no exception. So far, this autocrat has effectively taken control of banks, insurance companies and the automobile industry. Now he is after control...

I never posted a vanity before. Mods, please straighten out my post! I seem to remember a post by a freeper of an internal memo between Steny Hoyer to Boehner involving either potential confiscation of personal savings accounts or IRAs, 401ks, etc. I'm thinking this was in the first part of summer? Am I nuts?

I have a 401k in a Vanguard stock fund that I would really like to get out of. I rode it up over 12,000, rode it down all year and now I'd like to cut my losses before it takes another dump. What other Vanguard funds are safer, or even a money market? I can't just cash it in or the government would slaughter me at tax time. What's a safe haven to ride the coming depression out?

For nine years, Layvonne McAuley worked her job processing returned merchandise at the Rocky Mount QVC Distribution Center. When she swiped her security card to go to work Wednesday, it didn’t work. She was among several hundred workers who were accused of possibly making improper withdrawals from the company’s 401(k) plan. McAuley is livid. “This is so unjust,” she said. She said she wrote the hardship letters for the withdrawal of her own 401(k) money when she needed money for medical bills and tuition for her children. McAuley said she was embarrassed to talk to other employees about her need...

Ryan Ellis from American Shareholders got hold of a leaked copy of the Congressional Research Service's 401(k) report. The report describes 7 major policy issues of "defined contribution" plans. The majority of assets held in these plans are invested in stocks and mutual funds. So what are the researches telling congress?

Obama IRAs Could Raise $100 Billion in Five YearsBy Money Management Executive July 8, 2009 One of President Obama’s proposed financial reforms would require employers that do not offer a 401(k) to automatically enroll their employees into an IRA. If implemented, it would give the biggest boost to the retirement savings industry since the creation of the 401(k) in 1980, enrolling 40 million new investors, and attract more than $100 billion within five years, The Wall Street Journal reports. It would require companies with 10 or more workers that have been in business for at least two years to participate....

Ethics: Sen. Dick Durbin cashes out of the market and invests with a key Democratic contributor after a Treasury briefing warning of collapse. Meanwhile, Sen. Chris Dodd's Irish cottage appraises at triple the value he's disclosed.Those investors who rode the stock market down to the bitter end and saw their 401(k) accounts evaporate in the morning sun could have used the information Senate Majority Whip Durbin had at his fingertips on Sept. 19, 2008, when he sold $42,696 worth of mutual fund shares. By the end of September, Durbin had sold investments totaling $116,000.

I have a friend that is cashing in her 401k (mostly from a previous job)to pay off debts and buy into a business she is currently working for.The total amount is about $125000. The IRS had a tax lein from 2008 for $4500 that she paid along with a $450 fee to print a release for the 401k money. The lein was on the full amount of the 401k and not just the $4500 of it that was due. After this was paid for and the 401k money was still not released she called into her Senator's office for help...

Some investors in 401(k) retirement funds who are moving to grab their money are finding they can't.

Look at the new Fortune 500 list and you'll see all the mighty companies that drained your 401(k), Allan Dodds Frank writes. A guide to the worst of the best. When I look at this year’s Fortune 500 list to focus blame on the companies most responsible for my permanently diminished retirement accounts and my higher cost of living, there is no shortage of suspects. I could be mad at the most profitable company, Exxon, but I am not. They sell real products and, like most Americans, I was hardly surprised that as oil went beyond $100 a barrel, the...

Just a few years ago, it was a popular idea to make 401(k)s an opt-out proposition, where you would be signed up for 401(k)s rather than having to opt in. Now, the talk is of eliminating 401(k)s, because they are thought to be too volatile a vehicle for retirement. One proposal would require everyone to invest 5% of their income in government bonds with a guaranteed 3% rate of return adjusted for inflation. But is this truly what’s best for workers? Would we really be better off digging a hole and sticking our money in the ground or letting the...

Boost your retirement prospects by picking a low-cost locale. Most baby boomers don't have enough left in their 401(k) to kick back in Napa Valley or exit the mainland for Honolulu. Retirement dreams are being delayed and downsized. Even before the recession began, most Americans were behind on their retirement savings. And, let's face it, baby boomers are unlikely to recoup their losses anytime soon. But there's a lot you can do to boost your retirement prospects by picking a low-cost locale. There are plenty of places where you can scale back your cost of living without reducing your quality...

Nearly everyone has heard the plaintive tune “Brother, Can You Spare a Dime?” Until recently, the song seemed to be a relic of a Great Depression long gone, when everything was in black and white rather than color, the breadlines stretched around city blocks, and a dime could actually buy something worth having. But ever since the cascade of events last summer and fall that led to our current worldwide recession, the song doesn’t seem quite so quaint anymore. Could our grandparents’ and great-grandparents’ plight become ours? The lyrics are poignant and moving, but they highlight the differences rather than...

Received in my email today: SPEAKER OF WHOSE HOUSE? Windfall Tax on Retirement Income Adding a tax to your retirement is simply another way of saying to the American people, you're so darn stupid that we're going to keep doing this until we drain every cent from you. That's what the Speaker of the House is saying. Read below............... Nancy Pelosi wants a Windfall Tax on RetirementIncome. In other words tax what you have made by investing toward your retirement. This woman is a nut case! You aren't going to believe this. Madam speaker Nancy Pelosi wants to put a...

US companies pull out of retirement contributions By Deborah Brewster in New York Published: March 10 2009 23:34 | Last updated: March 10 2009 23:34 A wave of US companies are suspending payments to their staff 401(k) retirement plans in a bid to cut costs amid the economic downturn. Saks, General Motors, newspaper group McClatchy, clothing company J.Crew, FedEx, UPS, Coca-Cola Bottling, Reader’s Digest, Motorola, Regions Financial and Sprint Nextel are among the growing list of companies which have suspended contributions in recent months. Even the AARP, the influential advocacy group formerly known as the American Association for Retired Persons,...

Can you hear me now? But of course, the libtards hate capitalism and the evil corporations. They're cheering on Dear Leader as he brings America to her knees.

Is anyone talking about waiving the 10% penalty for early withdrawal, and possibly some help on the tax liability? I've heard no discussion of this, and I'm not sure of the possible unintended consequences, but it's personal now, since I'm going to need to do it soon to keep paying my bills. I've already borrowed the max amount, so that's not an option. My business is home construction related, so no banks are interested in loaning me money, and I don't want more debt anyway. Anyone?

President Obama's budget contains a [universal savings account mandate for employers.] But small-business owners, advocates and lawmakers already are working to water down the proposal, which would force many employers to participate in such savings plans. "We want to have small-business employees to have retirement-savings options, but we don't want to add a hurdle for business owners," said Bill Rys, tax counsel for the National Federation of Independent Business. "We need to look at whether this is the best time to put a proposal like this into place." To increase the reach of workplace pension plans, the administration's 2010 budget...

There are no fast solutions – either for the US economy or for individuals trying to rebuild retirement funds clobbered by the falling stock market. That was the message from Mark Zandi, one of the nation’s top economists. Mr. Zandi is co-founder and chief economist of Economy.Com, a firm that provides various kinds of research to individual, business, and corporate clients. He was the guest at a Monitor-sponsored breakfast for reporters on Thursday. How long will it take the stock market to recover? “It could be a decade,” Zandi said. “If I were an individual thinking about the size of...

Rethinking retirement plans for the work forceDavid Nicklaus ST. LOUIS POST-DISPATCH 03/03/2009 With our retirement savings system looking a bit frayed around the edges, the search is on for changes that will help workers navigate the vagaries of financial markets. Should we force people to save more, perhaps by requiring every 401(k) plan to have an automatic-enrollment feature? Should we regulate fees and account offerings more tightly? Or should we junk the 401(k) entirely and replace it with a government-guaranteed savings program? These ideas and many others have been floated amid a severe bear market that's dimming many Americans' retirement...

WASHINGTON (AP) - President Barack Obama is comparing the stock market to the daily tracking polls used during campaigns, saying that paying too close attention to Wall Street's "fits and starts" could lead to bad long-term policy. Obama spoke to reporters Tuesday after meeting in the Oval Office with visiting British Prime Minister Gordon Brown. Obama said he is not measuring policies against "the day-to-day gyrations of the stock market,"

If losing one’s job weren’t enough to worry about in this recession, for many Americans there’s the added angst of being able to afford one’s retirement. CNBC.com Wall Street in Crisis -------------------------------------------------------------------------------- And that may help explain why the seemingly relentless declines in home and stock prices have ravaged consumer confidence. The depth of that damage will be evident later this month when the Federal Reserve reports on household wealth in the fourth quarter, which will pick up where the third quarter left off. At $56 trillion, it was some 12 percent below what it was during its peak in...

S&P 500 sinks below 700 in Wall St AIG fallout pushes Dow under 7,000 U.S. stocks slid to 12-year lows on Monday as a record $61.7 billion loss for AIG and another government bailout for the insurer heightened concerns about the extent of damage to the financial system. * The stocks of companies that have found themselves on the wrong side of President Barack Obama's proposed budget fell again, as biotechs dropped for the fourth straight session. * The Dow Jones industrial average .DJI slid 299.64 points, or 4.24 percent, to end unofficially at 6,763.29. The Standard & Poor's 500...

I know that there are several knowledgeable people on this board, so I'm coming to you with a decision that I've been wrestling with for weeks. Conventional wisdom dictates that, unless absolutely necessary, you should leave your 401K/IRA alone. In normal times, I understand the reasons why that is wise, and agree whole-heartedly. But does that apply to our current economic environment? I have an IRA and a 401K. The IRA is in an index 500 account (closely tied to the S&P) and I have not paid anything into it for over 10 years. I still pay enough into the...

As Banking Woes Grow, Debate Over Nationalization IntensifiesOriginally Aired: February 24, 2009 As turmoil continues in the U.S. banking industry, speculation is intensifying over whether the government should take larger ownership stakes in banks. Columnist Paul Krugman and former FDIC chief William Isaac weigh the pros and cons. **SNIP** WILLIAM ISAAC: Well, the federal government has a lot of say in how banks operate. All these big banks have scores of resident examiners who live there. I mean, they're there every day. They go to all the committee meetings and the board meetings. The government has a huge say in...

Money Magazine) -- Alicia Munnell is a Harvard-trained economist. She served as an assistant secretary of the Treasury and is regarded as one of America's foremost experts on 401(k)s. You'd think she'd be terrific at managing her own retirement, but even she has to fess up to some mistakes. "When my son got married, I took some money out of my plan to help," says Munnell, who heads Boston College's Center for Retirement Research (CRR). "And I ended up paying a 10% penalty and taxes."

The spending bill has passed. I believe what I read about inflation, and increased unemployment as a result of this mess. I've also read about likely further collapse of the market. Here's my question: I owe $90k on a house that's worth about $190k. Should I raid my 401k? My employer allows withdrawls for a primary residence. My current mortgage is 5.75%. I'd pay myself 5.25% for the loan. - I'd be paying myself making 5.25% on my money versus losing money as it is right now. - If the market crashes further, as I believe it will, I won't...

We've heard about many people that have lost everything because of the "economic meltdown", but they've all been general citizen types, the rich, the middle and others .. but ...

Last month, Los Angeles Times columnist Tim Rutten penned a column on the recent tumble of the nation's 401(k) tax-deferred retirement accounts. (Since October 2007 our 401(k)s have lost a third of their value -- a cumulative $1 trillion.) "There's been little discussion of the way in which this economic implosion has exposed the utter failure of the now-ubiquitous 401(k) retirement accounts," Mr. Rutten offered. "In fact, the entire 401(k) system looks increasingly like the sort of bait-and-switch con relished by the Bernie Madoffs of the world." The problem, according to Mr. Rutten, is that "in 1978, when Congress amended...

House Democrats Contemplate Abolishing 401(k) Tax Breaks 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-California, and Rep. Jim McDermott, D-Washington, 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...

Biden lashes out at corporate greed at Colo. stopCOLORADO SPRINGS, Colo. (AP) — Democratic vice presidential candidate Joe Biden said Wednesday it's unfair that executives of failed corporations are paid millions of dollars while their employees lose their pensions. Biden vowed that he and Barack Obama would attack corporate greed if they're elected. Biden took direct aim at executives who draw big salaries while leading failed companies. "Their pensions go first," he told a roaring crowd.

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...

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-California, and Rep. Jim McDermott, D-Washington, 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...

You have to give Rush Limbaugh a perverse kind of credit. At least when he is demonizing Barack Obama, fabricating Obama policies, blaming Obama for single-handedly causing the recession and the stock market crash, he doesn't pretend to be fair. Opening his first post-election rant against the president-elect, Limbaugh launched in with a certain relish. "The game," he told his radio listeners, "has begun," the LA Times reports. Sean Hannity, on the other hand, insisted on feigning a post-election detente, telling his Fox News television audience last week, "I want Barack Obama to succeed." Didn't he think anyone would notice...

Next Catastrophe Think Fannie Mae and Freddie Mac were a politicized financial disaster? Just wait until pension funds implode. Funds worth trillions of dollars start to plummet in value. Political pressure to be “socially responsible” distorts the market decisions of government-related enterprises, leading to risky investments. Investors who once considered their retirements safely protectedwake up to a sinking feeling of uncertainty and gloom. Sound like the great mortgage-fueled financial crisis of 2008? Sure. But it also describes a calamity likely to hit as soon as 2009. State, local, and private pension plans covering millions of government employees and union workers...

Teresa Ghilarducci: The 401(k) Retirement System Has FailedJanuary 30, 2009 03:51 PM ET | Emily Brandon **SNIP** Under Ghilarducci's plan, outlined in her book When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them, all workers who don't have a traditional pension would be required to contribute 2.5 percent of their income to a government account with a 2.5 percent employer match. A 3 percent return above inflation would be guaranteed by the government. U.S. News asked Ghilarducci about her controversial retirement plans. Excerpts: **SNIP** How will GRAs fix the retirement system? After 30 years of experience...

I was made aware of this by my Mom's financial guy... Thought Id' share this message from my broker, in case you haven't heard about this: "Congress and President Bush signed legislation that suspends the rule requiring retirees over 70 ½ to take withdrawals (RMDs) from tax-deferred retirement accounts, such as traditional IRAs and 401(k)s. This suspension currently lasts for one year, 2009. The intention is to give retirement accounts time to rebound from the difficult economy/market conditions. Please note that you can still take distributions from your IRAs during 2009; they are just not required. Customers who turned 70...

Any FReepers planning to cash out what's left of your 401k accounts before his messiah-ness is coronated? Even with (a) reduced value of 401ks currently, (b) taxability, and (c) early withdrawal penalty, it could be a good idea -- especially considering that some Dems in Congress have already talked about "safeguarding" (i.e., confiscating) our hard-earned money.

The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401(k) plans. After watching her account drop 44% last year, Kristine Gardner, a 35-year-old information-technology project manager in Longview, Wash., feels no sense of security. "There's just no guarantee that when you're ready to retire you're going to have the money," she says. "You either put it in a money market which pays 1%, which isn't enough to retire, or you expose yourself to huge market risk and you can lose half your retirement in one year." Many retirement experts...

Starbucks Corp. told employees the company will no longer guarantee that it will make a company match to their 401(k) accounts next year. In a letter to employees sent last week, the coffee giant said it will switch to a "fully discretionary match" from a "fixed employer match" starting Jan. 1 for employees "future roast" retirement savings plans. That means the company can decide whether or not to make matching contributions to participants in the retirement plan for future years. The Wall Street Journal reviewed the letter and the company confirmed it. "In order to invest and grow responsibly and...

Should the 401k Be Killed?By Justin Fox Thursday, Dec. 04, 2008 **SNIP** That leaves the question of just what the best retirement-savings system for working families might look like. There have been several proposals (including one by Barack Obama during the campaign) to create modestly subsidized, automatic IRAs, at least for the more than 50% of private-sector workers who don't have access even to 401(k)s. Ghilarducci wants more — a government-run plan, financed in part by the end of the 401(k) tax deduction, that would guarantee a 3% return above inflation. Don't think that's a good deal? Fine. But remember...