Posted by Curt on 23 October, 2008 at 12:02 pm. 8 comments already!


One more reason to be fearful of a Obama and Democrat sweep…..losing our 401k’s: (h/t QandO Blog)

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.


A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee on her proposal. …

Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

Whoa boy. That new system sounds suspiciously like Social Security eh? Even better, employers will no longer be able to write off their matching contributions to a 401k plus you get taxed for your capital gains. So basically this means no employer contributions, no tax benefit, end of 401k’s. What do you get in return?

Six hundred bucks.

“From where I sit that’s just crazy,” said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, New York. “A lot of people contribute to their 401(k)s because of the match of the employer,” he said. Belluardo’s firm does not manage assets directly.

Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined-contribution plans, he said.

“If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets,” Belluardo said.

This plan would not allow you to touch the money….just like Social Security. And you get the huge investment return of 3% for your trouble.

Just more evidence of the Democrats goal of keeping us all on the government nipple from birth to death.

0 0 votes
Article Rating
Would love your thoughts, please comment.x