Category — 401K

I wanted to get some opinions from folks on this idea that I’ve been kicking around.  I totally agree with Dem. Congressman Tom Perriello, who said if you don’t tie Congress’ hands they will keep stealing.  Have truer words been spoken?  As a prime example thanks to Zero Hedge, I offer this little idea from a recent Federal notice:

13. Should some form of lifetime income distribution option be required for defined contribution plans (in addition to money purchase pension plans)? If so, should that option be the default distribution option, and should it apply to the entire account balance? To what extent would such a requirement encourage or discourage plan sponsorship?

In other words, should we force people to buy Treasuries with their 401Ks.  You know, for their own good, and not just because the government wants to loot our retirement accounts.  *guffaw*  Hey, if they can make you buy health insurance, why can’t they force you to buy Treasuries?  It’s not that far a step now that we’re staring Obamacare in the face.

All of this brings me to my “crazy” idea.  Should I cash out and pay the penalty now?  I have a few more decades to go before I’m eligible under the current rules for withdrawal.  Imagine what the tax rates are going to be like then.  And that’s assuming the robber barons in Washington or Wall Street don’t clean me out first.  There is absolutely nobody in this system looking out for me so why not grab what’s left of my cash and run?So, please provide some feedback and thoughts in the comments section.  I’m just curious to see how other people feel about this.  Am I just crazy or crazy like a fox?

Over at the Wall Street Journal, Alan Reynolds wonders where Obama will get $4.3 trillion dollars to fund all his new programs?  But never fear, Democrats won’t let a little thing like money rain on their parade.  They’re already floating a trial balloon that would net them $4.5 trillion:

House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, said that since “the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

Democrats want to nationalize your 401K, and put it in Al Gore’s Social Security “lock box”.  You know, the lock box that our politicians spend every year and put a big IOU in.  In reality though, it’s really an IO”ME”, since the only way the government’s IOU on Social Security can be paid off is with more taxes on you and me.  That’s exactly what this plan will do too.

Barack Obama and Barney Frank will nationalize our 401Ks and that money will evaporate just like Social Security taxes do year after year.  Then you and I will be on the hook for paying ourselves back long after they’ve left office because remember, the government makes no money it doesn’t take from us.  But wait, there’s more!  If you act on this limited time offer, besides the asset seizures, Democrats will make you pay yourself $600 dollars a year with a guarenteed 3% return!  And believe it or not, if you act in the next 10 minutes, Democrats will throw in a 5% payroll tax just to sweeten the pot.  I bet you never knew you could be so generous to yourself.  What a steal!  (quite literally)

The Obama stock market discount is very real.  With the far left-wing firmly in control, the market may very well plumb fresh depths.  The key question now is will his policies turn 2009’s recession into 2010’s depression?