401(k) and fiscal cliff

[GrimJack]

Executive Order 6102 - Wikipedia, the free encyclopedia

That was just an executive order. It was issued in the post depression years. Depression was in 1929. The order was in 1933. On the same lines...the great recession bottomed out in 2008. We are in 2012, and with a president who is fond of EO's.

I do not see a correlation between hoarding gold and a 401k and it was not confiscated but bought back. Though it sure does hint that going back to the gold standard is a seriously bad idea.

I am not talking of outright confiscation.

Then you probably should not have used the word 'confiscation'.

There is already a campaign to save the 401(k).

Save My 401k »

It's good to have the kind of faith that folks above have. I would keep my eyes open.

[jpg7n16]

What kind of a financial "advisor" are you? Do you really understand finance, or are you one more of the sales/marketing types that masquerade as an "advisor". People would do well to avoid a particular type of these so called "advisors", because the only thing that they seem to do is sell whatever crappy investment "product" their company peddles.

(Of course, there are fee based independent financial advisers who know their stuff, and usually guide their clients in the right direction).

Which one are you?

Seriously?

You got me. I'm posting on here to sell everyone things. That's why my signature is chock full of links to my products. Buy buy buy!!


You really think that the method a financial planner uses to charge clients is the main determining factor of how intelligent they are? And how well they know finance?

I am not "claiming" things. Just asking questions based on news from reputable sources. No tin foil hat here.

BS you aren't. You posted a link to a credible article about the potential taxation of 401k CONTRIBUTIONS.

And based on that article, you jumped ship and asked about the likelihood that gov would confiscate 401ks or tax the full balance.

Which is why the 1st thing I posted was, did you actually read the article?? Clearly your fears are not supported by your own articles.

These are just some examples. But you can search google for a lot more of them.
To Avoid Fiscal Cliff, 401(k) Plans May Fall Off Deep End
Fiscal Cliff Could Cut 401(k) Contributions by 64 | Financial Planning
Could the fiscal cliff push your 401K over the edge? | 11alive.com
Will fiscal cliff fears slam your 401(k)? | Cashin' In | The Cost of Freedom

All the above are reputable news sources that are talking about potential impact on the 401(k).

They deal with the impact on CONTRIBUTIONS, not balances. So they don't even apply for the questions you asked.

Good job finding sources for your ideas.


Besides, how many people do you know that currently contribute more than 20% to their 401k?

Average 401(k) Contribution: 6.8%

This wouldn't impact as many people as you think. And it may not even happen.

Admittedly, an outright confiscation is an extreme step, I agree unlikely. I also agree that making a decision one way or another regarding your 401(k) when in fact no changes have been made, and only talks of it happening, is not the way to go.

Again, I am not trying to "fear monger". Just calling attention to an article in TIME, and since I have almost 40% of everything I have in a 401(k), was alarmed.

But the TIME article you are referring to doesn't even mention 401k confiscation. For or against, it's not even discussed. It talks about future CONTRIBUTIONS.

I keep capitalizing it in hopes that you realize your own articles aren't related to the topic you've posted on, or the fears about your assets.

"I'm scared because 40% of my assets are in 401ks" -- okay, but what does that have to do with your future contributions?

Are you saying that the fed is not printing money? Are you flat out denying QE?

Are you saying that the fed printing money, means they're stealing money from you?

Are you saying that because of QE, you are required to buy CDs?

Banks need to hold some capital. This capital has to come from somewhere. Before the FED got into the money printing business (to be fair, they have always done this, but the scale has just increased by an order of magnitude in recent times), banks had to solicit deposits from customers. They still have to do that, but just not as badly as before (due to the cheap dollars printed by the Fed). This explains the low interest rates we get from the banks.

Great. Then don't buy CDs if the rates are below your required rate of return.

There are plenty of other investment options. And low rates do not = gov stealing from you.

Further hints that you are a sales/marketing professional, and not a true finance guy who knows what he is talking about.

My degree in finance, and the CFP(R) designation after my name say otherwise.

What financial credentials do you have? What do you do for a living again??

Go back and re read my post. I said many managed funds "under perform" the market.

Further evidence that you're not reading my posts. As posted above, many 401ks have index fund options in them. If you believe index funds are the way to go, then YOU get to choose those in your 401k when your employer makes them available.

This is different from an outright decline in investments. If the market returns were 10%, but a fund returned 8% over the same time, the fund then is considered to have under performed the market. And such funds also charge a "management" fee. Of course, no one forces people to invest in these funds, and I was just bringing that to the attention to people reading this post.

And as posted above, they are available in many 401k plans when employers make them available.

If you don't like it, that's your employer's fault, not the government's.

So folks, the next time a front office "advisor" sells you a junk fund from his company, please be sure to decline it. Go for fee based advisors who actually know what they talk about.

...because as we all know, the method by which an advisor charges his fee is the true method of whether or not he knows finance.

Education? Nope.
Certifications? Nope.
Experience? Nope.
Logic? Nope.
Ability to help you better understand your financial situation? Nope.

Fee structure. That's where it's at.

While the government may not confiscate or take adverse action just yet, elitist economists (the kind that think they know what to do with OUR money), are setting the stage with their bogus studies. They are conditioning the general public of low expectations, so when the time comes adverse action by the government becomes accepted.

Please cite a study where they've evaluated any aspect of confiscating 401ks.


And once again, please tell us WHY they would ever want to do that? You still haven't been able to come up with anything. And have ignored answering the question in every post.

I think that's because you don't have a logical answer to that. Why can't you answer the question? It's pretty central to the thread you created.

[EEinNJ]

I'm enjoying this little dust-up...

I don't think the government is literally planning on confiscating IRA's. The story making the rounds about the study of Danish people's retirement savings habits and the incentives has planted a seed with the policy wonks who advise politicians.

The idea, simply is, there's a big pot of untaxed income out there, and "we could change the rules so the sheep can't put as much into it- and they wouldn't notice or care!".

No, they won't confiscate it outright- just lower contribution maximums, limit eligibility based on income, and require age based minimum distributions. These are all already in place- they'll just tighten it up.

[bUU]

I have little doubt that stirring up fear, uncertainty and doubt with regard to these kinds of thing can be employed to support certain political perspectives, or to foster the interests of certain people's own financial gain. For those reasons, assertions along these lines must bear up to the most stringent of scrutiny. The probability of a vested interest being behind the FUD is simply too high to allow such assertions any lee-way.

I do believe that there is going to be a struggle, as there always is, between various parties, to resolve the fiscal cliff. The most obvious (rich versus poor) is actually a bit too crude - it actually breaks down into sub-disputes (rich and middle class versus poor, vis a vis whether more of the costs of society will be addressed by making poverty more structurally a caste; rich versus middle class, vis a vis who is going to pay more than they pay now; etc.) One less obvious struggle is generation versus generation. Conceptually, every deficit can be thought of, to some extent, as a struggle between today and the next generation, with the next generation losing. Generally, the next generation has no political power, but is protected (to a very small extent) by proxies among current voting patterns. What we're seeing here, though, is more of a age-over-50 versus age-25-50 struggle, which I think we can say is prompted by those proxies: Rather than dumping yet-even-more of today's cost onto the generations to come, there will be great temptation to shift burden either onto those who have already exploited our economy to acquire wealth (changing tax rules regarding Roth IRA distributions, making Medicare less valuable or putting needs testing in place, etc.), or onto young workers (reducing the ability to put savings away for retirement tax-free).

One thing I always think about when considering each of these struggles is The Golden Rule: How would I feel if I was "them" and this happened. I'm going to feel bad being on the short-end of any stick, of course, but how much more will I feel bad being on the short-end of one of the sticks versus another of the sticks. Another thing I think about with regard to such struggles is whether the shifting of burden is a case of scorched earth; are you aiming to take away from the next generation something you exploited to great benefit, once your generation no longer will benefit from it as much?

I hope the government keeps some basic tenets of fairness in mind when deciding among the various options. Someone gets hurt no matter what they do, so hopefully they're going to make the choices that result in the fewest number of people being shifted onto a track where they're going to suffer significant misery due to economic distress, now or in the future.

[Snodog]

Are you saying that the fed is not printing money? Are you flat out denying QE?

I blame our corporate media for this common misconception. The fed is not actually printing money, in fact they are doing just the opposite. QE is the fed buying treasuries which means the fed earns the interest on the savings bonds instead of the former owner. They are sucking money out of an economy that is already starved of money. The Center of the Universe » Blog Archive » QE follow up