Trying to find sound information on whether or not the U.S. Government wants to manage your private 401(k) and IRA accounts has not been easy to verify. I heard Eric Bolling and Gerri Willis talking about it today with Bolling sitting in for Neal Cavuto – so decided to see what’s new in the Cold War between the U.S. Private Sector and Union Pensions. The government’s story is that they want retirees better protected. Those paying attention see the 401(k) and IRA grab as a way to bail out public sector union pensions.
I find not much is new but am reminded of several startling past events, and warnings to be ready for an assault because it is coming. Note comments by Newt Gingrich below saying Treasury and Labor have already asked for public comment on ‘the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams,” and Obama’s Latina double, Cristina Fernandez de Kirchner, president of Argentina.
The Senate approved an agreement by an overwhelming bipartisan margin at 2:07 a.m. on New Year’s Day that would avert the so-called fiscal cliff in part by encouraging investors to roll over 401(k) plans into Roth versions of those accounts….
The retirement-savings provision was included as a way to help pay for a two-month delay in about $110 billion of domestic spending cuts slated to go into effect on Jan. 1. The offset also involved other spending cuts.
Currently, 401(k) plan participants can only roll their money into a Roth 401(k) after three qualifying events: changing jobs, retirement, or reaching age 59 and 1/2. But under the Senate plan, workers with 401(k)s, 403(b)s and similar defined contribution plans would be able to convert to a Roth 401(k) designated in their benefit plan at any time. Lawmakers believe that easing restrictions on the conversions will produce federal funds because participants must pay tax on the money when they put it into the plan. Disbursements paid during their retirement years are made tax-free.
What “encouragement” can we expect? And the devil is in the details.The details regulations still have to be worked out.
The Senate held hearings in October 2010:
Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more “fairly” distribute taxpayer-funded pensions to everyone.
Sen. Tom Harkin (D-Iowa), Chairman of the Health, Education, Labor and Pensions (HELP) Committee heard from hand-picked witnesses advocating the infamous “Guaranteed Retirement Account” (GRA) authored by Theresa Guilarducci…
In a nutshell, under the GRA system government would seize private 401(k) accounts, setting up an additional 5% mandatory payroll tax to dole out a “fair” pension to everyone using that confiscated money coupled with the mandated contributions. This would, of course, be a sister government ponzi scheme working in tandem with Social Security, the primary purpose being to give big government politicians additional taxpayer funds to raid to pay for their out-of-control spending. Read the entire story at Human Events – with testimony you will want to know about.
From IBD November 28, 2012, we are warned that the idea of the government taking your retirement funds is well documented. Don’t miss the paragraphs in bold text below.
But many in Washington see our investment accounts not as the expressions of well-planned, disciplined decisions but as untapped reservoirs of wealth they can drain to fix the problems that they caused.
The tax protection that 401(k)s have now can be wiped out by grasping politicians who refuse to do what’s right, which is to severely cut spending.
The war on retirement, particularly 401(k)s, is quiet now. But that’s because it’s a cold war.
And like the postwar tensions between the East and West, it could erupt at any time into a hot war.
One group of retirement plan professionals is warning that the hostilities might be closer than many of us think. The American Society of Pension Professionals and Actuaries launched on Monday, according to Reuters, “a media campaign intended to educate U.S. employers and workers that the federal government might consider changing the tax benefits of retirement savings accounts.”
A website set up by the ASPPA advises account holders to tell lawmakers to “keep their hands off your retirement savings” and explains that “Congress needs to reduce the deficit, and part of deficit reduction will most likely be ‘tax reform’ that increases tax revenue” — the strong suggestion being that Washington is coming after Americans’ 401(k)s.
If the ASPPA were alone in issuing its warnings, it could be written off as the hyperbole of an isolated group. But Washington’s lust for Americans’ retirement investments is well documented.
President Obama’s National Commission on Fiscal Responsibility and Reform, for instance, proposed lowering the cap on the amount workers could place in their 401(k)s without incurring taxes.
And nearly three years ago, Newt Gingrich and Peter Ferrara wrote on these pages about the Treasury and Labor departments “asking for public comment on ‘the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams.'”
“In plain English,” said Gingrich and Ferrara, “the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.”
A representative of the liberal Pension Rights Center, Rebecca Davis, testified that the government needs to get involved because 401k plans and IRAs are unfair to poor people. She demanded the Obama administration set up a “government-sponsored program administered by the PBGC (the governments’ Pension Benefit Guarantee Corporation).” She proclaimed that even “private annuities are problematic.”…
Deputy Treasury Secretary J. Mark Iwry, who presided over the hearing, is a long-time critic of 401k plans because he believes they benefit the rich. He also appears to be one of the Administration’s point man on this issue.
(Bloomberg) — The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort…
There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.
Several places I see that the Ford and Rockefeller Foundations are pushing the conversion of our private retirement plans.
This “proposal” can only mean one thing – Treasury smells smoke. Maybe you should pay attention to what they’re huffing! And before you say “oh they’d never do that” I want you to read this:
“Here is a warning to us al. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.”
The obvious concept is that when the government runs out of money, or they face a drying up in interest for its debt, they will come for the $19.4 trillion in American’s retirement accounts. It seems that day may be finally drawing near.
From the above ZeroHedge post is this from Bloomberg:
The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investment.
You’ll remember that Obama’s three National Labor Relations Board (NLRB) appointments during a pro forma session were ruled illegal by a Federal Appeals Court. The head of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, was appointed at the same time, during the same pro forma recess. It is generally believed that Codray’s appointment is illegal and unconstitutional as well.
Cristina Fernández de Kirchner, the first elected female President of Argentina, could be Barack Obama’s twin sister any day of the week (and I’m not speaking of skin color). She’s a narcissist and as she stepped into her second term:
…is once again ready to face a rather disastrous domestic situation, with a severe economic crisis, galloping inflation and a widening unemployment. Source: Vogue
Madam Kirchner’s husband preceded her in the presidency. See, it does happen.
When public comment has already been asked for, something is brewing, and it doesn’t matter what we want. They pander and then ignore us. I cannot find the comments, but did find one on a .gov website. We can see that the Senate found this matter worthy of their time. It’s coming.