Will the Next Congress Get Rid of your 401(k)?

  • redheaded_dud...

    Posts: 408

    Nov 07, 2008 11:06 PM GMT
    Not a good idea, imho.

    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."

    The rest is here: http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html
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    Nov 08, 2008 1:47 AM GMT
    401Ks were just a slick way to get captial to the stock markets. Ordinary people would never have invested to that extent so they cloaked it in a retirement account....and got business to chip in cuz it was cheaper than promising a pension.
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    Nov 08, 2008 1:58 AM GMT
    Caslon7000 said401Ks were just a slick way to get captial to the stock markets. Ordinary people would never have invested to that extent so they cloaked it in a retirement account....and got business to chip in cuz it was cheaper than promising a pension.


    You are correct. And now the defined-benefit plan (the classic pension) is nearly unknown to anyone except government workers (although a big multi-national client of mine still has one, I was pleasantly surprised to learn recently).
  • Aquanerd

    Posts: 845

    Nov 08, 2008 2:41 AM GMT
    Dude,
    Your not really expecting a thouhtful answer to your question from this group are you?
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    Nov 08, 2008 2:56 AM GMT
    Would someone care to explain?

    I have a 401K with my employer but people make it out to sound like just a scam to get me to give Fidelity my money? Is it a bad thing then and what would this idea do my existing plan?

    Confused icon_confused.gif
  • Aquanerd

    Posts: 845

    Nov 08, 2008 3:20 AM GMT
    Trance24 saidWould someone care to explain?

    I have a 401K with my employer but people make it out to sound like just a scam to get me to give Fidelity my money? Is it a bad thing then and what would this idea do my existing plan?

    Confused icon_confused.gif


    Only if you want to put your retirement in the hands of the Government. Make sure you double what your FICA total is on your pay stub, or at least up to the percent that your company matches. You can check out independent calculators that can show you how much you will earn in interest, given your age. I will freak you out how much money you can earn.

    But don't rely on some anonymous reply to a sports themed website. Do your own research and get an understanding for yourself. I have maxed out my 401K withholdings since I was in my 20's and have stepped it up with each pay raise and promotion. Even is the demos try to steal part or all of my investments, I'll still be fine in 20 years. Compounded interest is the most powerful tool to become independent. Whichis why people that love government hate it so.
  • dfrourke

    Posts: 1062

    Nov 08, 2008 3:46 AM GMT
    Aquanerd saidDude,
    Your not really expecting a thouhtful answer to your question from this group are you?


    wow...what a 'Debbie Downer'...some of us are fairly financially savy thank you very much...I started the "Bank of Rourke" 11 years ago and have placed a good chunk of security in my 403b...in addition to my pension [I am one of those government workers icon_wink.gif]...I have no revolving credit and just paid off my students loans...FINALLY above the line! I wouldn't have done this if someone hadn't taken the time to sit down and show me [teach me] how I could help secure my future...

    I do think there seems to be a socialist push in this upcoming administration...we need to watch that...educate folks and see what is the better deal...

    - David
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    Nov 10, 2008 1:31 AM GMT
    I assume a 401(K) is similar to a Registered Retirement Savings Plan (RRSP) that Canadians can invest in. I am not sure why the Government would want to get rid of the preferential tax treatment (Canadians can deduct their RRSP contributions from their taxable income). It is in the Government's best interest for people to have saved enough money for their retirement. And any person with any sense (or a good investment counsellor) will not put all their money in equities, but a blend of equities, bonds, money market funds, etc..

    In Canada in 2009 the Government is allowing the creation of tax free savings accounts. Up to $5,000 per year can be put into the account. The interest or dividends earned in the fund are not taxed, and the capital gains are not taxed when money is withdrawn from the fund. The $5,000 is not tax deductible though.
  • GQjock

    Posts: 11649

    Nov 10, 2008 5:55 PM GMT
    I do think there seems to be a socialist push in this upcoming administration...we need to watch that...educate folks and see what is the better deal...

    Socialism

    Buzz word a vague idiom, usually a neologism, that is common to managerial, technical, administrative, and political work environments. Although meant to impress the listener with the speaker's pretense to knowledge, buzzwords render sentences opaque, difficult to understand and question, because the buzzword does not mean what it denominates, yet does mean other things it ought not mean

    What's Socialism's meaning to you?
    Is it meant to stir up images of toilet paper shortages and long lines for bread? Or of pot smoking hippy liberal professors
    'cause I'm not getting the warning signs

    When a republican President provides Corporate Welfare to the tune of BILLIONS of dollars
    And socializes warfare .... we are payin' for these wars you know

    That's ok ... but when a Democratic President, God Forbid
    Suggests we REINSTATE the taxes Bush did away with on the top 1%

    That's ...... Wait ..... until the drumroll stops ..... SOCIALISM ! ! !
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    Nov 10, 2008 6:33 PM GMT
    I think this would be much more palpable if the rate of return was closer to the average. I also think it might be a good idea if, on your annual returns, you were given the option of putting all or part of any monies you were to receive into your personal account. After all, the money you get back is really an interest-free loan you give to the government. You should be able to make some money on it.
  • dfrourke

    Posts: 1062

    Nov 10, 2008 6:41 PM GMT
    GQJock...relax...you seem to be getting caught up in 'socialist' buzzword onthe campaign...that is NOT what I am referring to...socialism is a perfectly valid way of doing business...and in some ways better than what we have...my point in emphasizing the statement you pulled out is that we need to be informed consumers...

    socialism


    An economic system in which the production and distribution of goods are controlled substantially by the government rather than by private enterprise, and in which cooperation rather than competition guides economic activity. There are many varieties of socialism. Some socialists tolerate capitalism, as long as the government maintains the dominant influence over the economy; others insist on an abolition of private enterprise.

    - David icon_wink.gif


  • Koaa2

    Posts: 1556

    Nov 10, 2008 7:43 PM GMT
    Caslon7000 said401Ks were just a slick way to get captial to the stock markets. Ordinary people would never have invested to that extent so they cloaked it in a retirement account....and got business to chip in cuz it was cheaper than promising a pension.


    Agree with this 100%, it has been a slick trick to also get rid of defined retirement plans. Now what is happening, is that some companies are starting to eliminate matching funds. The whole 401k is a disaster for the average person.
  • GQjock

    Posts: 11649

    Nov 10, 2008 10:00 PM GMT
    If it's a "perfectly valid" way of doing business
    Then why's it got to be watched

    Instead of saying that Obama is going to be employing tax incentives and partaking in job creation to combat the effects of thirty years of disastrous deregulation

    You use the word socialism ... and it WAS brought out on the campaign and it Still is a Buzzword to diminish what is being done without making any argument against it
  • Posted by a hidden member.
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    Nov 12, 2008 3:32 AM GMT
    "Compounded interest is the most powerful tool to become independent. Which is why people that love government hate it so."

    As part of the government (the voting, eternally-vigilant part), I beg to differ. I love compound interest and yet respect the absolute need for effective government in a small world with nearly seven billion people.

    Capitalism is an economic system, not a governmental one - in spite of many who wish otherwise, but for them I save some of that eternal vigilance.icon_cool.gif.
  • HndsmKansan

    Posts: 16311

    Nov 12, 2008 3:40 AM GMT
    It hasn't been seriously suggested and it won't happen.
  • dfrourke

    Posts: 1062

    Nov 12, 2008 6:32 AM GMT
    GQjock...again R E L A X

    Socialist policies need to be watched just as deregulation needs to be...because most consumers don't take the time to way out the pros and cons and decide which is better...

    ...some of our systems don't need to be tampered with...others do...when we have change [and I believe most of the country is looking for government to step in and help]...we need to watch how those changes affect our current markets and systems...

    that is my point.

    *yeesh*

    - David icon_rolleyes.gif