401k confiscation?

[Original_Intent]

Earnings on a Roth IRA are not supposed to be taxed. As for early withdrawls, I believe you can only take out the amount you put in not the earned portion.

That's my understanding, the earnings are never taxed as long as they are taken as legitimate retirement withdrawals. Early withdrawal on earning I think would result in it being both taxed and also a penalty.

 

[specsaregood]

One person at a congressional hearing a couple years ago was reported to have suggested the idea which was quickly rejected by those on the panel. It is not going to happen.

http://www.factcheck.org/askfactche...democrats_talking_about_confiscating_ira.html

That factcheck article is from 2008. How about some news from this year instead?

http://www.humanevents.com/article.php?id=36823

In February, the White House released its “Annual Report on the Middle Class” containing new regulations favored by Big Labor including a bailout of critically underfunded union pension plans through “retirement security” options.

The radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement -- which lets them off the hook for their collapsing retirement scheme. And, of course, the Obama administration is eager to accommodate their buddies.

Vice President Joe Biden floated the idea, called “Guaranteed Retirement Accounts” (GRAs), in the February “Middle Class” report.

To put it simply, yes they DO want to, because the unions pension funds are underfunded and are bound to collapse. They want to steal everybody elses savings to make up for it.

 

[Zippyjuan]

The Annual Report on the Middle Class says nothing about nationalization or seizure of 401ks. If it does, can you please provide the section? It does mention some ideas for possible alternative retirement accounts- but nothing about replacing current ones. Here is the document in question: http://www.whitehouse.gov/sites/default/files/microsites/100226-annual-report-middle-class.pdf

I will start you out. Discussions on Retirement Accounts begins on page 25.

I see a proposal to have "automatic IRAs" This would change the "opt" direction to "opt out" rather than "opt in" to have money deducted from your paycheck and automatically deposited into a retirement accout. That doesn't sound like getting rid of retirement accounts. You can agree or disagree on the opt-in vs opt-out options.

I see a proposal for a "savers credit" where the government would match (as a tax deduction) your contributions to a qualifying retirement account. Again, does not sound like seizure.

On page 27 you can find a section on proposed updated regulations for 401ks.
Let me quote that for you:

We need to do more to give families better choices to reach a secure retirement. To ensure that workers have good options to save for retirement, and to provide workers with all the information they need to make the best choices about their retirement savings, the Administration is improving the regulation of 401(k)s to make the system more reliable and transparent. These regulatory actions include:
••Improving the transparency of 401(k) fees to help workers and plan sponsors make sure they are getting investment, record-keeping, and other services at a fair price.
••Encouraging plan sponsors to make unbiased investment advice available to workers, helping workers avoid common errors that undermine retirement security, while providing strong protections against conflicts of interest.
••Promoting the availability of guaranteed lifetime income products, which transform at least a portion of retirees’ savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their living standards will be eroded by investment losses or inflation.
••Reviewing and requiring clear disclosure regarding target-date funds, which automatically shift assets among a mix of stocks, bonds, and other investments over the course of an individual’s lifetime. Due to their rapidly growing popularity, these funds should be closely reviewed to help ensure that employers that offer them as part of 401(k) plans can better evaluate their suitability for their workforce and that workers have access to good choices in saving for retirement and receive clear disclosures about the risk of loss.

Here is the bit about Guaranteed Retirement Accounts:

All workers, no matter their level of financial sophistication, should have access to well-diversified low-cost investment options. They should also have an easy way to put a portion of their savings in a safe, inflation-protected investment choice. While Treasury Inflation-Protected Securities (TIPS) and I Savings Bonds offer this kind of protection today, many investors are unfamiliar with them or lack an easy way to access these options in their retirement accounts. To address this, some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation. These accounts would allow workers to be sure that the funds invested in them will grow steadily without the risk of a market collapse.
GRAs would not replace Social Security, which provides and will continue to provide a dependable retirement income on which tens of millions of Americans rely, and most workers will want to continue to have a mix of assets with different risk and return profiles in their overall retirement portfolios. But in combination with the proposals above, increased access to safe investment options may provide a more secure retirement for American workers. The Task Force recommends further study of these issues.

Nope- still not finding anything related to government seizure of IRAs or 401ks. Somebody is just trying to use the fear of that possiblity to manipulate your political opinion. Looks like it works. They have you believing it.

 

[devil21]

Promoting the availability of guaranteed lifetime income products, which transform at least a portion of retirees’ savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their living standards will be eroded by investment losses or inflation.

BAM! Seizure under the guise of "assuring future payments". In other words, convert people's 401k plans to Treasuries but it's really just Social Security 2. Of course this white paper doesn't get specific about the size and scope of such a program. Those details will be for the banker's lobby and their bill writers to quietly decide then hand to a Congresscritter to foist upon the US taxpayer....just as long as the Feds get to sell YOU Treasuries under penalty of law to kick the can a little more.

Would you really be surprised if it happened Zippy? Other countries have already done that to some extent. Japan has for a looong time been using retirement accounts to shore up their consumption economy and Argentina recently outright seized retirements, just to name a couple. I think where the article goes wrong is confusing the unions with the "workers". I think the paper means "workers" collectively, not just unions. (Plus I don't buy that you read that whole paper either)

 

[Travlyr]

BAM! Seizure under the guise of "assuring future payments". In other words, convert people's 401k plans to Treasuries but it's really just Social Security 2. Of course this white paper doesn't get specific about the size and scope of such a program. Those details will be for the banker's lobby and their bill writers to quietly decide then hand to a Congresscritter to foist upon the US taxpayer....just as long as the Feds get to sell YOU Treasuries under penalty of law to kick the can a little more.

Would you really be surprised if it happened Zippy?

Come on devil21. This has to be on the up and up, it just has to be! The government is here to help us... by looking to improve our retirement lives. How cool is that?

See pages 26, 27 & 28.

Updating 401(k) Regulations to Improve Transparency and Reliability

Improving TRANSPARENCY! Isn't this the best administration EVER! I think we can expect the same kind of transparency that we were promised for the health care debate.

Administrative Actions to Improve Retirement Security
"Making it easier for people to understand their options for retirement saving with the help of an easy-to-follow guide and website created by the IRS and the Treasury."

An EASY-TO-FOLLOW guide for the stupid people! And a website created by the IRS! Wow! Maybe even automatic withdraws from our bank accounts! Yes! I feel better now.

Another Option: Safe Investment Choices

Like treasury bonds.

Treasury Inflation-Protected Securities (TIPS) and I Savings Bonds

All they are REALLY doing is just changing the name of (401)k to Guaranteed Retirement Accounts (GRAs)... and a rule or so... like taking over the management... "Guaranteed Retirement Accounts are like universal 401(k) plans except that the government, as befits a large and enduring institution, will invest and manage the pooled savings.".... But everybody will be guaranteed an income for life! And that income will grow more than the government induced inflation (excluding food and energy)... but better than social security!

GRAs would not replace Social Security

And that's not all... it gets even better! If we act now... before the elections... you get: TWO GUARANTEED INCOMES FOR LIFE! How wonderful!

Yes indeed. What ever would I do without these angels of government? Whatever would I do?

 

[PatriotG]

I am researching. Some bloggers say it's a certainty and that they've already cashed out. Others say it's nuanced and not a wholesale nationalization of retirement accounts.

What do you know about this supposed confiscation and what steps if any have you taken?

The more I distrust paper money the greater the urge to cash it in, take the withdrawal penalty, and use most of the leftover money to buy PMs.

Reference:

http://www.restoretherepublic.org/documents/guaranteed_retirement.pdf

 

[Zippyjuan]

BAM! Seizure under the guise of "assuring future payments".

How does "assuring future payments" coinside with taking the money from the accounts? That seems to assure that the accounts WILL be there in the future. You cannot guarantee payment on an account which does not exist. They are all proposals to try to get people to save more money for retirement to take pressures off of Social Security.

 

[devil21]

How does "assuring future payments" coinside with taking the money from the accounts? That seems to assure that the accounts WILL be there in the future. You cannot guarantee payment on an account which does not exist. They are all proposals to try to get people to save more money for retirement to take pressures off of Social Security.

Future payment = annuities. The same goddamn thing as Social Security. Just a new take on the same Ponzi scheme. Take now, promise to pay later. Etc etc. I know you're smart enough to read between the lines on this. Based on your description, you're saying the Feds would guarantee everyone's 401k STOCK accounts would always be valuable. Yeah right. What else would the Feds be guaranteeing future payments on, if not Treasuries?

This new scheme will fund Treasury auctions since foreigners won't be buying anymore during the last days of the dollar's domination. I think this is still at least a few years off but since they're talking about it now, it will happen. It'll probably start innocently enough as voluntary or a mandatory but very small percentage of 401k contributions but then when the dollar starts to really fail it will then be urged as the Patriotic(tm) Thing To Do (kinda like war bonds were). Then when TSHFT with the dollar it'll become mandatory. It's a natural step in the progression of a failing currency. We have money to seize. Other places like Zimbabwe instead seize real property. The bottom line is the gov't seizes whatever it can when the economy and the currency in particular starts to fail. 401ks make up something like $11 trillion in stocks/assets. That's a huge pot that a bankrupt government will not ignore.

 

[EddieG]

No different than social security. Gov't spends the money and promises to pay you back. How will they pay you back? They will hope the Ponzi scheme lasts. All entitlements are nothing but promises to pay. When the scheme collapses, the people at the end of the line are going to lose out big.

 

[MN Patriot]

The difference between a Roth and a regular IRA or 401k is when you pay the taxes (yes, there are Roth versions of both). On the regular versions, your contributions this year are deductable from your taxable income for this year (ie not taxed on your elgible contributions- there are limits on how much you can put in depending on your income). You will pay taxes (if elgible for taxes then) when you withdraw the money from the standard versions- including taxes on whatever the assets in the account earned during the time you had the account. .

In a Roth version, the money you put in is not tax free but any money taken out later (including any returns earned on the investments within the account) are not taxed (unless the tax code on them gets changed later on).

Roth accounts have the same income thresholds as standard accounts. You can also spread money between the two but your total combined contributions of both cannot excede the amount you are limited to for just one. For example, if your income level this year allows you to make a $3000 IRA contribution this year, you can put $3000 into a Roth IRA (or 401) OR $3000 in a traditional IRA or some combination like say $2000 in one and $1000 in the other.

Key words: "unless the tax code on them gets changed later on".

I get depressed when people unquestionably tout Roth IRA's as a great tax break and investment. SUCKERS! The government has their fingers on it, and when they need it, they will take our 401ks, IRAs and pensions and convert them into some sort of socialized poverty guarantee.

I've been suspicious of 401ks and IRAs from the start, but have put money into them without the illusion that I will get it back with 100% certainty. Everything has risk, so diversify.

 

[agitator]

From Restore The Republic:

The Labor and Treasury department, along with the Obama Administration ARE MOVING FORWARD with The Nationalization-Confiscate IRA's and 401K's.

Why do they Want Your Retirement Accounts?

The-YOUR equity will be used as collateral; in an attempt to balance the Trillion Dollar U.S. Deficit.

This will be done in an effort to once again make the United States credit worthy to China and other buyers of our debt.

The Most Recent meeting held on September 14th and 15th, between the Labor and Treasury Departments outlined the Course of Action.

The agenda is called "Lifetime Income Options for Retirement Plans".

The Federal Government will Control an estimated $3.613 Trillion Dollars in IRA's and $2.350 Trillion Dollars in 401ks.

Your Equity will be placed in U.S. Treasury Bonds, that will Pay out an estimated 3% annually.

One major clause is that upon retirement, the value of the Your Retirement Account will be placed into Annuities. Once an individual Dies, the Value of the Account will Automatically become property of the Government. The Program will be Structured much like Social Security Accounts (the biggest Ponzi Scheme ever created).
The Only way Government would get away with what will be "The Largest Heist Known To Man" is by Allowing or Creating a Major Financial Market Meltdown!
An aging person who sees his or her Retirement Account Drop 50%-60%in a matter of Days.... Is More willing to take a Conservative Approach... Even if it means "Government-Guaranteed Income".

The move toward Nationalization of IRA's & 401ks will Initially be Offered as an Option. Those who are Unwilling to accept Government Run Retirement Accounts, will be Stripped of their Current Account Tax Benefits...

You'll be Forced to Pay Taxes on your Holdings, Automatically Wiping Out One-Third of your Wealth!

This will Take place After the Stock Market Drops an Estimated 40-60%!
If the Following Indicators are Right... A Stock Market Crash is imminent!

• Unsustainable U.S. Debt
• Real un-employment continues to Rise
• Housing market continues to Drop
• Failing Banking System (2-7 Banks Fail Weekly)
• Lower Quality of Life (1 in 8 Americans are now on Food Stamps)

A Massive Crisis is Brewing!

Remember The Government Phrase: "Never waste a good crisis"

 

[devil21]

Is this your own writing or do you have a source link?

 

[agitator]

Is this your own writing or do you have a source link?

From: http://rtr.org/

 

[Zippyjuan]

Retirement fund industry was having the hearings to try to be allowed to offer annuities as a 401k option. They were looking to the government to protect them from potential lawsuits if they start to offer them. The hearings were to collect information.

http://www.bankrate.com/finance/retirement/pros-and-cons-of-retirement-income-options-1.aspx

Pros and cons of retirement income options
By Chris Morris • Bankrate.com

Highlights
Americans' lack of retirement readiness prompted calls for a solution.
Lifetime income options offer a regular income stream, but at a price.
The various products and payout plans make it hard to do a comparison.

Despite near-constant reminders, Americans aren't really good at saving for retirement. And they're likely to be just as bad at stretching their savings to last the entirety of their golden years. It's a problem that has the government weighing whether to require plans to offer an option that can generate retirement income for their workers.

The Government Accountability Office recently solicited opinions from the financial community -- and the general public -- about ways to enhance the retirement security of citizens. At issue: Should the government force financial companies to offer lifetime income options that give retirees a predictable stream of retirement income for the remainder of their lives?

The financial community is split down the middle on the issue. Some are in favor, saying it can alleviate a significant and growing problem. Others note that if worded poorly, enforced lifetime income options could wrestle control of workers' financial future away from them.

What are they?
There's nothing new about a lifetime income option. Many insurance companies, and some investment houses, currently offer them in the form of immediate annuities. After investing a lump sum, you're eligible to get a fixed percentage of that amount per year for the rest of your life once you hit a certain age.
So, for instance, if you have $100,000 in the annuity and you get a 5 percent rate, you'll get $5,000 of retirement income each year going forward -- even if you live longer than 20 years.

Consumers, though, haven't been too enthusiastic about the investment option. The concern has been that if you put, say, $100,000 into one of the accounts and die before it's paid back to you, your heirs may get nothing. If you live a particularly long time, though, you could get back more than your original investment.

Other plans lock you in -- not allowing you to withdraw your money prior to retirement, even in the event of a financial crisis.

In general, financial advisers, such as Jim Holtzman, a CFP and CPA with Legend Financial Advisors in Pittsburgh, aren't exactly anti-annuity. They do say, however, that the amount people should invest in a lifetime income option account comes down to spending needs. The payout should be enough to cover your projected monthly living expenses. Beyond that, other investment vehicles should be considered.

"It's complicated, but you have to structure a portfolio that makes sense for the client," he says. "Part of the reason this (debate) is coming up is pensions have (basically) gone away. Also, in the last 20 years, we've had two bubbles burst in the market. That's going to cause concern for a lot of people who were approaching retirement."


Loss of control
The problem with these plans is the loss of control. Rather than putting people in charge of their own finances, it asks them to trust the government or their employer's retirement plan provider.
Given the state of Social Security and the financial services industry, people aren't real eager to do that.

Sensing that, some annuity providers are changing their plans to offer more flexibility. Prudential, for example, offers IncomeFlex, a plan allowing people to choose different strategies to control the investments.

It works like this: Investors are guaranteed a percentage of their initial investment, but can choose (and change among) one of several asset allocation portfolios -- some aggressive, some conservative. If the investment gains value, their monthly payouts increase, but if it loses money, the minimum payment doesn't change.

Prudential representatives say the key to success with this plan and the idea under consideration by the government is reducing financial hazards while increasing financial security.

"This proposal is all about taking the risk for the liabilities that individuals have and transferring them to a private entity, which is much better positioned to bear it," says Mark Foley, vice president of Prudential's Innovative Simplicity product group in Hartford, Conn.

One of the biggest concerns about the government's suggestion is the lack of detail.

"Conceptually, consumers could benefit from this, but I think there are a lot of questions that need to be answered," says Holtzman. "What's the cost structure? Who's on the hook for it if things don't work out and the company goes bankrupt? Would it be something the Labor Department would handle and fund?"

Logistical considerations
On a smaller scale, what happens when workers move from one job to the other? Would their plans be transportable? Would there be fees for doing so? Or, what happens if an employer switches plans?
No one knows. And no one is willing to hazard a guess at this point.

Transparency is another concern: The varying number of annuities (and payout plans) makes it hard to do an apples-to-apples comparison, leading opponents to claim that some people may actually end up worse off.

Proponents and opponents of the government's proposal do agree on a few things, though.

No one seems to want this to be an all-or-nothing option. Consumers, say both sides, should not be forced to annualize the entirety of their savings. And both note that the discussion about lifetime income options will have one beneficial aspect, regardless of the direction the government chooses: It helps educate people about the option and causes them to think about their own retirement income plans

Read more: What to know about lifetime income options http://www.bankrate.com/finance/ret...etirement-income-options-1.aspx#ixzz171NJMkFw

 

[Zippyjuan]

///
http://www.planadviser.com/Lifetime_Income_Hearing_Witnesses_Demand_Fiduciary_Shield.aspx

Lifetime Income Hearing Witnesses Demand Fiduciary Shield --------------------------------------------------------------------------------

September 17, 2010 --- A strong theme in testimony from witnesses at this week’s hearing into providing lifetime income options in retirement plans was a warning of how much sponsors fear incurring liability in provider selection and participant education. ---


Numerous presenters at the two-day Washington, D.C., session sponsored jointly by the U.S Departments of Labor (DoL) and Treasury insisted that sponsors were concerned that, without detailed regulatory guidance, their eventual choice of a lifetime income option provider and their educational efforts could well land them in fiduciary hot water under the Employee Retirement Income Security Act (ERISA).

So, because provider selection and education will be more complex than in other retirement plan service areas, a number of the witnesses requested that the DoL’s Employee Benefits Security Administration (EBSA) and Treasury officials consider a variety of safe harbor protections.

“Under current law, the selection of an annuity provider is fraught with potential missteps that could result in continued liability for the plan sponsor well into the future,” said Janet Boyd, Director of Government Relations for The Dow Chemical Company, who appeared on behalf of the American Benefits Council. “To rectify this, plan sponsors need clear, simple fiduciary guidance allowing them to make lifetime income options available to plan participants without risking a significant increase in potential fiduciary liability.”

Most witnesses started by agreeing that a strong and comprehensive participant education effort would have to be mounted for a lifetime income option to be effective – or to be accepted at all.

“The individual comments in response to the (agencies request for information) RFI overwhelmingly expressed a lack of trust in service providers, employers/ plan sponsors, and the government as an administrator of lifetime income benefits,” declared Rebecca Davis, who offered testimony on behalf of the Pension Rights Center. “We believe that their fears are best addressed by ensuring that any implementation of a required annuity option in 401(k)-type plans be accompanied by a large public education campaign. The comments demonstrate a lack of understanding of the value of a lifetime stream of income.”

“It is our belief that these products often need to be sold to participants and clear education and communication is critical,” agreed Martin Schmidt, Chairman, Institutional Retirement Income Council, in his testimony.

 

[devil21]

Both of those articles say roughly the same thing as agitator's post. The main difference is that those articles don't mention where that annuity payment comes from or what the money is invested into for this "guaranteed" retirement income stream. Safe to say that it's gov't bonds right??? What else could possibly be considered as "Safe" as a T-bond to "guarantee" payments in 30 years?

Despite near-constant reminders, Americans aren't really good at saving for retirement. And they're likely to be just as bad at stretching their savings to last the entirety of their golden years. It's a problem that has the government weighing whether to require plans to offer an option that can generate retirement income for their workers.

Where is this provision in the US Constitution? Goddamn nanny-staters trying to take care of everyone. The problem isn't entirely that people don't plan for retirement. The problem is that the cost of living with an inflating dollar and shrinking job market means people can't save for retirement. You'd think these politicians would know this since it's fucking obvious. Go ahead and tell Detroiters they aren't saving enough money for retirement...