Just when you thought the situation with your 401(k) account couldn't get any worse, our new democrat-controlled government is preparing a plan to nationalize your personal, private 401k retirement account!
The plan calls for the elimination of tax deferred 401(k) contributions. No more 401ks. Instead, the federal government will pay every worker $600 per year (inflation adjusted each year) and require every worker to invest 5 percent of their after-tax pay into a new retirement account to be administered by the Social Security Administration. The money would be invested in a new class of government bond which would yield 3 percent per year, adjusted for inflation.
That would be a drastic reduction in the amount that I currently invest in my 401k. I contribute the maximum amount of $15,500 per year and my company match gives me a couple thousand more to add to my personal retirement. My 401k is a big part of my retirement plan. I love the fact that it allows me to plan for my own retirement. I never want to depend on social security or the government in any way.
Why does the government want to take away that independence?? What's their motivation?
Money, of course. By removing the tax deferral of 401k contributions, the dems can increase federal tax revenues by about $80 billion a year. In addition, this plan would allow the government to take over the largest pool of private savings in the U.S. And, as with the Social Security fund, the government could borrow and spend all the annual proceeds over and above any payout to retirees.
This ingenious plan will enable the government to redirect some $3 trillion which would provide the money to fund the massive expansion of government programs, subsidies and tax "cuts" promised by Barack Hussein Obama.
If all of this sounds inconceivable, then consider another democratic President, Lyndon Johnson, who promised not to raise taxes to fight the Viet Nam war, but rather he suggested borrowing money from the SS fund for ONE year.
The federal government has borrowed this annual "surplus" every year since. And now SS is nearing a deficit with nothing but a bunch of government IOUs to pay the retirees. Click here for more information and find out who is behind this "grand" scheme.
And here's another viewpoint from Investment News.
Thanks Kristin for the heads up. It's like a tsunami with the Democrats in charge and the market currently tanking. They're both cyclic but the problem with the feds is we're guaranteed two if not four years of bigger government and more government oversight in our personal and economic lives. It's a bunch of BS whenever I hear about a bad idea that will patch something and only last for a certain period of time. It doesn't work that way. My county here in upstate NY enacted a sales tax increase about 3 years ago that was due to expire by a certain date by 0.5% increments. It's gone down by one 0.5% increment and now we have been told it won't go down any further. The size and cost of government just keeps going up and they will find a way to collect your money one way or another. They will do and say whatever it takes to collect. It's sad but true unfortunately. So now we have to look forward to years similar to LBJ? That's rather strange (uh..um) when Obama has been compared to JFK (yea right).
ReplyDeleteFYI - I just came across some reading material projections from the Motley Fool site regarding the future Obama administration.
ReplyDelete"How Obama will affect your portfolio" - http://www.fool.com/investing/general/2008/11/07/how-obama-will-affect-your-portfolio.aspx
and
"Obama tax policy effects" - http://www.fool.com/investing/dividends-income/2008/11/07/is-an-obama-tax-storm-looming.aspx
@Mark: Thanks for the comments and the links - very interesting reading.
ReplyDelete