Govt. talks of confiscating all 401K's

[bjl584]

There has been some talk from a few representatives about confiscating all of the 401K and retirement plans in the US in return for a guaranteed retirement from the US govt. Basically a form of the already existing Social Security program. I know this is all just talk right now, and it is definitely a minority of people that are on board with this, but does anyone out there think that anything like this could ever happen? I think there would be a major uprising if the govt. tried to move forward on this. They would be confiscating peoples' wealth. On top of that, there would be no more tax advantages for retirement savings. Pretty scary stuff.

[jIM_Ohio]

I read a similar link from another forum. If it passes, it would be considered increasing taxes on the middle class.

You know republicans would vote against it
any wise democrat would too.

Many times bills like this get introduced because a senator or congressperson accepted a donation from someone on condition that the bill get introduced. It does not mean it will ever be put to a vote.

[maat55]

You would bump into me on the way to burn down the capital building. If it were to happen, Armageddon would be around the corner.

[kork13]

Send those guys back to Cuba and China where they'll be happy! I'll keep my own investments and manage my own life, thank you very much!

Realistically, I don't think it would even be feasible. Think of it this way--the second that such a bill were to actually reach the floor of Congress, I'd pull out everything, every last cent (regardless of tax consequences, etc.), and park it all in a bunch of CDs. So would every other person who has faithfully invested for their retirement. Although, people who largely ignore their retirement options would LOVE such a plan.

I understand that this gets into politics (which I'd like to avoid, particularly right now), but I firmly believe that the individual can make much better choices than the government can for the entire nation of billions. Yes, some people will get the short end of the stick, and others will have more than might be "fair", but there are better ways than large-scale government intervention to provide for the poor.

And in the end, life just isn't fair and equal to all. I'm sorry, you have to work for what you have in life. Where people need help to get started, there are hundreds, if not thousands of NGO's that can provide that necessary aid, and is the reason that about 3% of my income goes straight to various forms of charity, not to include the 10% tithing I give to my church, which also provides heavily to providing aid to those in need.

In short, I believe in the faculties of the individual. Direct government intervention (except in terms of funding smaller organizations which in turn actually do the job) almost never succeeds.

[disgruntable]

Do you have some type of source?

The government does a lot of stupid stuff, but this even sounds a little far fetched...

[Exile]

I googled "government plans to confiscate 401(k)'s". Most the search results showed that the Democrats are behind this "plan". This tells me that this is a bunch of rabid right-wing Republican fear mongering along the lines of the Yahoo! story "Christian right intensifies attacks on Obama". And based on a few of the foregoing posts. it's working.

Actually, the Republicans are the ones who want to seize our 401(k)'s to cover the Wall Street bail-out, and if you don't believe me, click "Goverment may seize 401(k) plans"

[rob62521]

Oh, yeah, I want the government to take my 403b and "handle" it...look at what a mess it's made of social security...going all the way back to LBJ when s.s. had a surplus so they transferred it into the "general fund" and left s.s. basically broke.

[scfr]

Well, you got my attention, and at first I thought this was one of those "so-and-so is really an alien" type rumors, but here is a link I found:

Would Obama, Dems Kill 401(k) Plans? - Capital Commerce (usnews.com)

I wonder why the writer of the article used Obama's name in the title? (Well, no I don't really wonder. I'm sure it was politically motivated.) I did not see anything in the article to indicate that he is actually supporting this idea; in fact, the author cited one of Obama's advisors on financial matters (Warren Buffett) to show why it is a bad idea.

[mikandmari]

I did hear this silly idea, I'd like to know who thought it up. They would restore the amount that 401Ks were worth a few months ago, before the big slide.

But what about us careful types (previously called "Chicken Littles") who moved our money to money markets and short term bonds last spring?

Coming up with a bill like this would be political suicide. They spend money like it grows on trees, but to "seize" the property of American taxpayers? Good luck with that....

[asmom]

Originally Posted by scfr

I wonder why the writer of the article used Obama's name in the title? (Well, no I don't really wonder. I'm sure it was politically motivated.)

Tell me about it. According to the article, House Democrats (Obama is from the Senate! ) supposedly invited a person to testify about her idea which is a long way from "the government is planning to confiscate all 401Ks". My God, is there anyone out there capable of reporting the facts without obfuscating and twisting them to suit their own political views?

[cantretire]

Originally Posted by kork13

Send those guys back to Cuba and China where they'll be happy! I'll keep my own investments and manage my own life, thank you very much!

Realistically, I don't think it would even be feasible. Think of it this way--the second that such a bill were to actually reach the floor of Congress, I'd pull out everything, every last cent (regardless of tax consequences, etc.), and park it all in a bunch of CDs. So would every other person who has faithfully invested for their retirement. Although, people who largely ignore their retirement options would LOVE such a plan.

I understand that this gets into politics (which I'd like to avoid, particularly right now), but I firmly believe that the individual can make much better choices than the government can for the entire nation of billions. Yes, some people will get the short end of the stick, and others will have more than might be "fair", but there are better ways than large-scale government intervention to provide for the poor.

And in the end, life just isn't fair and equal to all. I'm sorry, you have to work for what you have in life. Where people need help to get started, there are hundreds, if not thousands of NGO's that can provide that necessary aid, and is the reason that about 3% of my income goes straight to various forms of charity, not to include the 10% tithing I give to my church, which also provides heavily to providing aid to those in need.

In short, I believe in the faculties of the individual. Direct government intervention (except in terms of funding smaller organizations which in turn actually do the job) almost never succeeds.

If they can pass a law to take our 401Ks, what is to stop them from taking CDs and other savings accounts? Can such a thing even be legal?

I have to reread the Constitution again tomorrow.

[cantretire]

oh, i made that font really big, LOL!

[cptacek]

Originally Posted by cantretire

I have to reread the Constitution again tomorrow.

Why bother? The Constitution is being stomped on over and over again with this bail out, with no end in sight.

[asmom]

Here are some more links about this proposal which cannot be linked to either the Dems or Republicans and certainly not to Obama:

http://www.epi.org/newsroom/releases...SP-Release.pdf

A new proposal for Guaranteed Retirement Accounts, released today by the Economic Policy Institute as part of its Agenda for Shared Prosperity, offers such a plan. Developed by retirement security expert Teresa Ghilarducci, this proposal would provide a guaranteed supplement to Social Security that is reliable, affordable, and both actuarially and economically sound.

The program would be funded through payroll deductions of 5%, half from employees and half from employers, with the employee contribution offset through a flat $600 refundable tax credit. Mandatory deductions would continue to the Social Security income cap. Employers with a defined benefit plan at least as good would be exempt.

Meltdown 101: Market's effect on retirement plans | MiamiHerald.com

Some in Congress have begun discussions about how U.S. workers could be guaranteed more security but still see some growth in their retirement funds. The House Committee on Education and Labor is holding hearings on the issue.

On Oct. 7, they heard testimony from Teresa Ghilarducci, an economics professor from The New School for Social Research in New York. She proposed a radical, short-term fix, where 401(k) plans would be turned over to a guaranteed retirement account composed of government bonds earning a 3 percent annual return, adjusted for inflation.

When workers begin collecting Social Security, the account would pay them an inflation-adjusted annuity, based on the accumulated funds. For example, a 55-year-old worker with $50,000 in a 401(k) account in August would swap out the $50,000 for a guarantee of $500 per month in retirement.

Q: What about a long-term solution?

A: Chilarducci proposed the creation of universal guaranteed retirement accounts in which the federal government invests $600 for every worker. Workers would put 5 percent of their pay in and the account would earn a guaranteed 3 percent rate of return, plus inflation. The cost of this plan would be offset by doing away with most tax breaks currently offered on 401(k) accounts, so the government wouldn't have to pay any more than it does now. The accounts would be safer and guarantee all workers an income during retirement.

It appears that this is one person who has made this proposal which in fact doesn't sound all that bad, although I'll admit I am not convinced it would be for me. Apparently they are having hearings on the proposals in an effort to see what options are available to shore up social security. It makes sense to me that the govt. would be pro-active for a change. That is a long way from "the govt. is going to confiscate your 401(K)."

[kork13]

Originally Posted by cantretire

If they can pass a law to take our 401Ks, what is to stop them from taking CDs and other savings accounts? Can such a thing even be legal?

I have to reread the Constitution again tomorrow.

That's actually a really interesting point... The "necessary and proper" (Sec. 1, Art. 8, Cl. 18) argument could potentially be argued for it. But, depending on the Supreme Court Justice that looked at it, the "due process" clause (14th Amendment, Sec. 1) would more than likely trump any proposed action like this: "No state ... shall deprive any person of life, liberty, or property, without due process of law." However, it could also be argued that providing a guaranteed pension in the amount of the siezed amount could satisfy that due process. (normally, "due process" for siezed property calls for the equitable compensation of the property to its rightful owner. This happens most often with siezure of private land by federal or state govt's.)

So yes, definitely an interesting question....

Originally Posted by cptacek

Why bother? The Constitution is being stomped on over and over again with this bail out, with no end in sight.

I think that's a bit of a stretch... Yes, current economic policies have been radical at best, but I wouldn't go so far as to say they're unconstitutional. Through the years, certain amendments and rulings/precedents have given a number of authorities that allow for some fairly drastic measures. However, if you do believe that recent events have violated the constitution, I think that would be a very interesting conversation (not to mention educational).

[Johansen8]

i will be in prison for retirement if that happens, so i wont worry about it. let them try it.

[cptacek]

Ok, I'll back away from that pessimistic statement. But, thanks to cantretire, I did go read the Constitution:
The United States Constitution - The U.S. Constitution Online - USConstitution.net

I'm not trying to be difficult here, really, please let me know where I am wrong.

Here are the powers of Congress according to the Constitution:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

To establish Post Offices and Post Roads;

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To constitute Tribunals inferior to the supreme Court;

To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;

To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

To provide and maintain a Navy;

To make Rules for the Government and Regulation of the land and naval Forces;

To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

To provide for organizing, arming, and disciplining the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

*********************
So what part of that says Congress can pass a law that gives the power to buy or bail out companies to an unelected official (Sec Paulson) with no limit on what he spends the money on and no limit on how much he CAN spend?

[kork13]

I'm summarizing here, but have ensured that I maintain the context of all of the statements:

Originally Posted by cptacek

The Congress shall have Power To ... provide for the ... general Welfare of the United States; ..... To borrow money on the credit of the United States; ..... To establish ... uniform Laws on the subject of Bankruptcies throughout the United States; ..... To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

*********************
So what part of that says Congress can pass a law that gives the power to buy or bail out companies to an unelected official (Sec Paulson) with no limit on what he spends the money on and no limit on how much he CAN spend?

I highlighted some sections which do just that, underlining the key phrases.

The constitution was intentionally (and very wisely) written to allow for interpretation by future generations. Without this, there would be no FAA, the governing body which ensures the safety of flight in the nation. Our founding fathers never could have made provisions to allow for such an organization when the thought of commercial flight was unheard of. In the same light, neither could they have foreseen our present circumstances. Thus, the powers of congress which have been invoked of late are entirely justifiable. Preferable? Perhaps not. Necessary? Depends on who you ask, but quite possibly.

Touching back to cantretire's original post, some of these same powers (and others) could potentially be used to validate other radical actions if deemed necessary... such as the implementation of a guaranteed retirement plan, and other measures to support such an action. I'm the last to say I like the idea of some (much) of this, but challenge the idea that our elected officials are working contrary to our constitution.

[disgruntable]

The constitution was written to allow it to be changed as future generations saw fit. The "interpretation" of the constitution is political doublespeak for "we are going to do what we want and we will 'interpret' the constitution in such a way to allow us to do it."

The constitution is a very simple document which requires very little interpretation. The interpretations which have been made have almost universally been made to infringe upon our rights and create a more obtrusive government. If we really needed an FAA, or a department of education, or a TSA, then certainly we could muster the support to amend the constitution to add one.

[Snave]

Originally Posted by asmom

It appears that this is one person who has made this proposal which in fact doesn't sound all that bad, although I'll admit I am not convinced it would be for me. Apparently they are having hearings on the proposals in an effort to see what options are available to shore up social security. It makes sense to me that the govt. would be pro-active for a change. That is a long way from "the govt. is going to confiscate your 401(K)."

asmom, I am having a hard time seeing how this "doesn't sound all that bad." Please explain to me why this would be good. I have read the links and listened to Ghilarducci explain her comments and how this will "spread the wealth around." The govenrment is going to TAKE my money that I have earned and saved away from me and in return give me 3% + inflation. Oh, she said the great news was that this wouldn't cost the government a dime. No kidding! However, it costs me everything. I am planning on never seeing Social Security to begin with, so I have saved and lived below my means so that I could afford a healthy financial lifestyle. What incentive does this give me to do this? Again, please explain.