House Democrats contemplate abolishing 401(k) tax breaks

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971

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-Calif., and Rep. Jim McDermott, D-Wash., 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.
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I had not heard this before. Have they lost their minds? We need all the retirement help
we can get. This must not happen.

I'd just guess here that the report is misstating whatever is actually being looked at, and that is being generous.

:rofl:

lol

:hi:

The Buckeye State has an official pennant, or to be more precise, it's proper nomenclature is a 'burgee'.


But President Obama can call it his 'flag' if he wants to. Cool with me.

That its just a republican distraction.

I don't want another mandatory system.

http://en.wikipedia.org/wiki/Social_Security_(United_States)

Not just for the employees either.

We need something different. What's going on now isn't working.

I googled "Teresa Ghilarducci 401K" the first time I saw this, still can't get a good grasp on where this is coming from or where it's headed.

and that no legislation has yet been written or sponsored, but somebody is trying to make hay with this "issue."

I heard about this yesterday and thought it was overblown.

But there is something to be said about 401k encouraging the public subsidizing private businesses, which is anything but a secure investment.

Times are tough for the "pass the Grey Poupon" "Democrats" - Pelosi's portfolio is tanking, she knows she needs cash from somewhere if she wants to keep getting Armani's *good* stuff.

That being said, even if your rumor is true, I expect that there are enough actual Democrats to keep this added savagery against the middle class from happening.

fuck the poor.

The article says that this is a proposal that would cut the retail fees charged now,and not that they would definitely do this. We will have to watch and call and write if it gets serious.
Thanks for the heads up.

And this time, read it more carefully.

While I don't necessarily agree with the proposal, it is not the horrible thing you seem to think it is.



You already pay 6.2% of your gross pay (up to $102,000) into SS and your employer is responsible for the other 6.2%.

Many on this board regularly call for a return to "Pension" plans. Well, this is a suggestion for one.

Please explain why you think this is so horrible.

and they are going to force me to pay another 5% for a 3% return no f-----g way. That's 17.4% of my money going into a SS fund that is nothing but IOUs. I'll take my chances putting that 5% into a 401K where (I) control where my money goes and (I) determine the degree of risk to take. If people don't want to take the risk of putting their money into the stock market put it in a safer option. You can't gamble in the stock market then expect to be bailed out when you lose money. They are lucky I already voted or I would be changing my vote, this is the kind of stuff the extreme left come up with every time the Democrats get in power.

No matter what you want and think, all your pension are belong to us (banksters, generals and other fraudsters of the elite).

Let's see"

5 perecent of my income is taken for a 3 percent return.

Right now, my husband's employer matches 100% on 5 percent of our income. That gives us a ONE HUNDRED PERCENT return on our money instantly - not a pitiful 3 percent. Furthermore, that's on pre-tax income.

Even with the huge drop in the stock market, we are way better off under this 401k plan than what Ms. Ghilarducci is recommending.

would you believe my employer offers to match only 25% of up to 4% of your salary as 401k contribution, after vestment? That is some weak sauce there. My wife's company has a 401k, but matches nothing at all.

Up to $20 a month. I'll be able to retire in 2250.

David

Please explain why you think this is so horrible.

3% Is way too close to the historical inflation rate. Hence after investing 5% of your pay for 30 years with that rate of return. The entire sum in the account will only be 18months pay. Not nearly enough to retire on.

A witness at a hearing advocated it. No bill was introduced.

Because anything in the stockmarket is a gamble. Either offer something more secure or guarantee everybody's 401K investment? Which one will cost the taxpayer more?? Why should it cost the taxpayer anything?

it is called a "defined contribution plan". A far superior way to go if your company has the good sense to do this.

Never had a 401K here. It did not exist in 1986. IRAs were a "new" thing in 1980.

:dem:

To KILL pension funds & unions, there HAD to be "something" that would hold out a little hope for the Boomers who were just getting their careers going strong.

I doubt that there was ever any REAL plan for any of us to really benefit all that much, because as long as our money was virtually "untouchable" by us, and was in the hands of "experts" for decades, it allowed for a BOOM in the stock market.. More money coming in regularly than they could have ever imagined, from the largest generation ever...and they got to "play" with it for a very long time, before any of us ever started to retire in great numbers...and by that time, the fat-cats would have made billions off of our "piggy banks".. To make us all "feel" prosperous, and generous with that 401 money, we got plastic cards, instead of regular raises, and an ever-inflating "value" on the houses we bought (with the ability to tap the faux-equity when the plastic got out of control)..
a recipe for disaster..lovingly cooked up by Reagan republicans..

and I do not disagree with you one bit. I paid plenty into various "retirement funds" and I don't have much to show for it

I don't care what they do with 401Ks quite honestly. You'd fare far better investing your own money in an IRA or savings bonds. Annuities don't do much for me as they are the next likely thing to go belly up IMO.

Yep, we worked our asses off and got jack sh*t for it as we watched the "American Dream" vanish before our very eyes alright and we paid for that too. :mad:

:dem:

adding section 401K in 1978. It went into effect 1 Jan 1980.

insourcing, the worker made redundant by mergers and acquisitions, of all that "fake" capital.

Bye-bye manufacturing, bye-bye textiles and clothing, bye-bye IT. That's a lot of "consumer-workers" who can't support themselves with the basics, with housing, healthcare, food, transportation, and utilities, let alone buy into any 30-year plan at RETIREMENT T minus 5-10 years.

put it into one of the safer options in your 401k or buy Savings Bonds. Don't take the option from me and force me to sink more money into a no existent SS trust fund for a 3% return.

You are willing to accept all losses in the market without a guarantee from the taxpayers??

anything all we are doing is deferring the taxes until the 401k is cashed out. I went to the casino one afternoon last week and lost $100 I don't expect to be bailed out by the taxpayers. When I put money in that machine I knew the chances were I could lose. If you would guarantee 401ks against loss I would go out and invest my money in the most risky volatile stock I could find. How about this idea to encourage savings, make the first $1000 of interest on a savings account deductible.

I got spooked after the Bear Sterns collapse and moved my money within the 401k into government backed securities.

As a result, my 401k is very slightly up this year (as compared to my coworkers who are seeing theirs drop 40 or 50%)

Nonethelesss, not only are people willing to take loses in the market, many of them did this year.

... in 2007?? Over their recent history (40 years), the Trust Funds have been 'invested' at decent rates of interest -- better than your commercial bank savings account, for sure.




http://www.ssa.gov/OACT/ProgData/intRates.html

... better take this back and quick. This crap is not going to fly, period.

Note to Democrats: please don't start alienating the voters before you've even won the race.

lately the other one was a couple weeks ago when Kucinich suggested guaranteeing 401ks against loss.

what they want to do is put YOUR SAVINGS away from the market...on TOP of SS

On the face of it this is not a bad idea...but the investment community is freaked

goes not some damn politician. It is a bad idea I am already forced to put 12.4% of my money in the SS system that a bunch of politicians on both sides sent to China.

the same folks who railed against Social Security back in the 1930s for the same exact reason

You do know the SS system is the most successful program in US history and the third rail. This is a return to a pension system that WORKS

Oh and with discipline you can STILL invest part of your money anyway you want

As is the 401K is not truly IN YOUR HANDS but I am sure you knew that

contribute to my 401K and there are 17 different options I can invest in with varying degrees of risk. The one bad thing is our company offered to match the first 6% of our contributions with 3% back 17 years ago and the jackasses in the Union wouldn't permit it. Then the Union gave up the pension plan they took us out on strike for 10 1/2 months to get.

enough said.,

Retirement funds in an ideal world are not to be put in something like the stock exchange. What amazes me is that people here rail against the stock exchange (not you) and also rail against the kind of Keinseian programs that got us out of the great depression and prevented the kind of poverty this country has really not seen in over two generations

a pro I guess. A non-managed index fund in most cases does just as well if not better than a managed fund when you consider the fees you pay the manager. I saw an experiment on 20/20 a few years ago where they let a chimp pick stocks and he out-performed many professional managers. Wachovia is the Administrator of my 401k, at 59 1/2 they tried to get me to transfer my money into an IRA managed by them. First of all they take money right off the top which reduces my principle then charge huge management fees. My money is invested in no-load funds with very low fees and I follow the same guide lines for asset allocation as any professional would. Were do you get the idea retirement funds should not be put in something like the stock exchange, I haven't ever heard such a thing. Any person you would call a professional manager will tell you a certain percentage of your money should be invested in equities to fight inflation since over the long run stocks will give you a greater return. The larger the potential return the more risk you have. In my opinion you can just disregard all my explanations because I earned the money and have earned the right to invest it where I want not some bureaucrat in DC.

on edit; Don't get me wrong I don't think our SS should be put in the stock market. I consider the SS system a safety net (floor) for retirement or disability. When I retire SS will only make up part of my income, most of it will come from my company pension and my 401K and IRAs. I feel I voluntarily put money in my 401K and IRAs and should be allowed to manage my money as I see fit and if I lose it that's also my problem. I also am dead set against a few Democrats in Congress taking away the tax deferment for the 401k.

Sorry for the screaming but those are PROFESSIONALLY MANAGED by fund managers HIRED by the HR department

Your ONLY say is how much risk you are willing to take

UNFRIGGING AMAZING!!!!!!!!!!!!!!!

like by an investment adviser that charges you exorbitant fees. I don't get your point unless you mean I should be able to pick individual stocks. I don't have the time or knowledge to pick stocks, that's why I have my money in a professionally managed Fund. I do keep up with investment strategies for asset allocations to make my decisions which Fund I invest in. We have 17 different Funds ranging from very conservative to very aggressive and they are all managed by top notch companies such as Vanguard, T.Rowe Price, Franklin and several others. I could transfer my money into an IRA if I wanted and would have total control over it but I am satisfied with the options we have in the 401K and I make too much income to make new tax deferred deposits into an IRA. I certainly don't have any control where my SS money goes or where this other cockamamie plan they are talking about would go.

and that IS the point.

As to SS it is far more than JUST retirement.

The RW talking points round these parts are amazing at times

that said YOUR arguments were exactly the same ones raised against SS by the RW back then...and here is more

folks back then were given a choice whether to pay into the SS or not...most went for it... you figure out why

to make. If I dump money into some kind of expanded SS I have absolutely no control with the money. There is no SS trust fund, it is financed with IOUs. Just why would I want to dump even more money into a expanded SS system giving me a 3% payback, that doesn't even match inflation. If I take the same money and invest it myself I guarantee you I can beat the hell out of that in the long run. Then when I decide to retire I can use the money any way I see fit. You don't seem to understand I have no problem with SS as it is I just don't want to be forced to put another 5% of (my) money into another plan. SS may have done fine in the past but when us baby boomers retire it will either be bankrupt or they will just have to print more money to meet their obligations. I have put a lot less money into my 401k and IRAs over the years and I can withdraw it all and blow it in a slot machines
if I want or I can annuitize it and draw more income from it than SS. Before my company offered the 401K I deposited a total of $12000 into a IRA back in the 80s and even now after this Wall Street meltdown it is worth better than $50,000 a 417% gain. Before the market dropped I had $60000 a 500% gain. The market will come back over time I lost about 1/3 the value of my 401k in 2000-2001 but by November 2007 it had gained back about 300%. Even now I have double what I have deposited in the plan.

that is a RW talking point going back to oh Reagan

The fixes are so easy it ain't even funny.

Oh never mind...

Hooray for all money in the Stock Exchange and good for you... given how many folks are about to retire and their 401K lost a bundle...

Yep, you are right... it is the safest system of all

And we really should never LOOK FOR A SAFER ALTERNATIVE for MOST AMERICANS

And I am also in the market by the way, before you even go there.

Let people roll over annually to an IRA of their choice or just let them choose their own custodian like we already do with IRAs. The current system of having corporate HR departments administer 401k plans makes no sense.

In that it is extremely successful, and I support it as a safety net or floor. We're all in it. Everyone.

However, at some point, I want to be responsible for being able to save more of my own money. I don't need the government taking even more of my paycheck for a minimum safety net, especially when I'm hoping to pay for single payer insurance. Just how much do you think the taxpayers are going to be willing to fork over?

but national savings stats don't back this up

Ours is currently at -2%

This is to ensure that people have a descent retirement since SS is not even a floor any longer as it has not kept up with inflation either. I am also positive you knew that.

It is amusing to hear "liberals" talking from both sides of their mouths. On the one hand they want a new New Deal, but when New Deal policies are presented people are starting to sound like good ol' fashioned 1930s republicans... that is Hoover Republicans

I don't!

We need incentives to save, not another plan that allows our money to be spent on another damn war.

color me surprised

They too will be taking over the AFJPs, and most likely selling the stocks in the investment portfolios, and buying Argentinan bonds, which they were having trouble financing in this credit crisis.

Yes, this was their failed experiment to privitize their SS system, but it seems awfully convenient that they are doing it when their own bonds are in trouble. It looks more like a money grab in a time of desperation than a true desire to stabilize income for the people. They said the money grab will allow the Argentinan President to keep the benefits flowing so she can get reelected. Ugh.

If it gets more serious, then we probably ought to act.

they haven't even won yet and they are putting this nonsense out..stupidity like this will get people to vote republican

:hi: and welcome to the Democratic Underground.

Social Security is something that you EARN by paying into it for YEARS! It makes me so angry when I read that Social Security will be gone soon. If this is indeed the case, why are people paying approx 8% of their paychecks into FICA & Medicare?

Answer: For their future!

Damn these people make me mad coming up with this type of crap.

Some argue that social security doesn't pay out enough to live on. Imagine what it would be like if it did not exist at all! :scared:

:dem:

Is this real or some kind of Republican distraction? If this is real and gets too much exposure, this is the sort of shit that can reverse elections.

Are they TRYING to snatch defeat from the jaws of victory?

this election is in the bag, unless someone really fucks up...like pulling this crap.

wow.. I hope this dies quickly and quietly.

this has been "out there" on many many financial forums for at least a couple of weeks. This was probably in the OP's link but:



I am trying to dig further to see just how serious it is, but I am not liking the parts about removing 401k tax breaks in exchange for MANDATING contributions which will be managed by the government, ie the same one that fucked up SS by raiding the tax money collected over the years for that purpose, and spending it on other things.

One disturbing part that has been tossed out is that the plan includes requiring workers to contribute 5% of their income per year. To another system that is out of their direct control? I don't think that should fly.

OTOH, 401ks do have issues that don't make them the safest or best vehicle for retirement savings, a fact about which many are about to be educated in a painful way.

What a grand mess.

But so far, no one democrat seems to be pushing it.

I posted about this a few days ago, and was royally attacked, called a freeper, cursed at, etc. The typical shoot-the-messenger crap you see around here.
But you are right: this is exactly the kind of thing that could swing the election. Folks don't want to pay another huge chunk of their tax money on something with very little personal return. I'm a strong supporter of social security, but ss to me is the safety net. After that, I want to have enough of my own money left to invest. With matching and prudent investing, it's still a good deal.

It's pretty transparent, isn't it?

Tax on 401k contributions and earnings is DEFERRED until funds are withdrawn in retirement. That is not costing government anything in the long run.

I consider that a tax break.

I don't understand what you are trying to say.

What I meant to say was that if you're in a much lower tax bracket when you retire and withdrawing from your 401k, you have said taxes.

Hope that's a bit clearer. :)

...like 401K's that voters are worried about... and twist it into a reason to be afraid of a Democratic win. It worked for them in 2004. They hope it will work again in 2008. My guess is the hearings are about PROTECTING the public from the kind of 401K losses the public just experienced. This was a discussion about IMPROVING retirement security*...but it's being spun to scare voters before a major presidential election. DISTRACTION.


SORRY. Not. This. Time.

And, btw, forward crap like this to truthfightsback.com.

* Many state level public retirement programs (teachers, firemen, policemen) are more secure than 401K's during these times. Therefore, our retirement fund did not suffer the HUGE losses that some, who only have 401Ks , did in the last months. I think the discussion is not to ADD to what people contribute to 401Ks...just to find a system that would manage them better.