It Not Your Money Uncle Sam or How to take your retirement away
By bobmnu
@bobmnu (8157)
United States
November 30, 2012 9:58am CST
With congress and the President looking over the Fiscal Cliff new ideas are surfacing on ways to solve the problem. In an article in Time Magazine (Nov 28, 2012) the suggestion by some to solve the problem is for the government to take the money in individual retirement accounts (IRA's and 401k plans) and use that money to fund the government. These plans were established to help people save for retirement and to use this money with Social Security to retire on. According to the article there is 10 Trillion sitting in these accounts and "Some of this money has never been taxed, and under current law never will be." The article also point out the political advantages of eliminating the plans "the Tax Policy Center in Washington has found that about 80% of retirement savings benefits flow to the top 20% of earners". It fits the Presidents plan to tax the rich. Yet these two statements are in conflict because the 401k plans are funded with pre tax dollars and are taxed when you draw the money out and many people are earning enough to have their Social Security taxes and their 401k would also be taxed.
One disturbing line in the article is "To maintain this savings incentive the government “spends” $100 billion a year in the form of tax breaks to those who stash money in these kinds of accounts." as if this was the governments money and we are taking it from them. One economist even suggested that the government require every employee have a 401k type plan with the government and it would be invested in US Government Bonds with a rate of return of 3% a year growth then this would be used to supplement your Social Security. A radical member of the British House of Commons even proposed that all pay is submitted to the government and then the government sends you a check minus the taxes for you to live on.
Read more: http://business.time.com/2012/11/28/fiscal-cliff-why-congress-might-have-to-mess-with-the-401k/#ixzz2Dimis0r1
If the government takes over the pension and retirement accounts in this country they have no obligation to pay you based on how much you contributed. You give up you protections under contract law. They can then take and not give back or tax you twice on the same money as they do with Social Security.
1 person likes this
3 responses
@chrystalia (1208)
• Tucson, Arizona
4 Dec 12
They are also looking at starting up a mandatory retirement savings program, to supplement social security--and the money employers and employees pay in will be invested in Treasury bonds and bills. I wrote a discussion on that one. The idea has been quietly floating around D.C. since 2010--either seizing existing 401ks and IRAs, creating a new mandatory retirement fund with even less restrictions than social security in terms of the ability of government to grab the money, or both. Of course creating a new nationalized retirement fund system (like our new national health, Obamacare) will be a lot easier to do, and just as effective, if not more so.
If they flat out steal everyone's private retirement funds, then people will stop using private retirement funds. However, if they create another social security type program, with mandatory participation, fine for not participating, and regulate the banks out of the private fund business, they have all the income they can spend--as long as anyone is working.
Scary thought.
@chrystalia (1208)
• Tucson, Arizona
6 Dec 12
I agree that is the goal, as with most of the other nutball ideas to come out of this administration. That's why we closed our business this year (it closes 31 December) and that's why I have taken everything out of the bank, and why I won't be paying my personal social security and stuff this year--just the business closing taxes. Since I am a free lance writer, I get my money then pay the feds--but starting next year--the feds won't get it from me. It will take them a while to notice I have disappeared, since I am not one of the rich of the world--If I WERE one of the rich, I would be planning to move. Since the government only understands money, we have to start voting with our wallets. I can use the 30% they have been taking from me more than they can.
@rodney850 (2145)
• United States
1 Dec 12
Bob,
I am at a real loss for words. Just knowing that this would even be considered for the briefest of seconds is ludicrous to say the least. How would this be justified? To do this would amount to larceny on the grandest of scales and I have a hard time believing America would stand for it. It might be the straw that breaks the camel's back. When people stop saving, and they most certainly would if this were even to come to a vote,banks would go belly up by the scores because their capital to lend and make money(interest) would virtually dry up. Banks can't make much money if they can't lend it to make the interest. I realize there are other ways banks make money but they have to have the assets to back their investments and those come from, yeah, savings. If you think this economy is bad, let congress mess with retirement accounts, and hold on, the ride is going to get rough.
@bobmnu (8157)
• United States
3 Dec 12
The talking point is the Rich (in this case those making $66,000 or more a year) use this more than the poor. It is not fair to the poor that the rich are able to save more for retirement. Add to this the fact that the politicians have spent your Social Security money. What the government would do with the money is to buy Government Bonds. In effect they would take your money and tell you to trust us to use wisely and maybe you will have some when you retire. That is what they did with Social Security put the money in a lock box and then took it out and gave us Government Bonds that we have to pay for now.
Any time a politician sees a large sum of money they try to figure out a way to get it for themselves. If you or I do it it is called sealing but when the government does it is called taxes.
@Adoniah (7513)
• United States
1 Dec 12
And what good would it do for obamderthals gov to take away the IRA's and 401K's. Too many of them are very near retirement age or are already retired...They would immediately be on the dole with the 51% through no fault of their own.
These folks would also fight back...There are just too many of them...This would be the trigger for a civil war...Even obamderthal's gov is not that stupid.
@bobmnu (8157)
• United States
1 Dec 12
Their hope is that by telling the people that 80% of the money in IRA and 401k is held by the top 20% of the people. People or couples in the top 20% are making about $65,000 or more a year. Hardly what you would call rich. but this is what is being suggested. Several of the advocates of taking the the pension funds feel it ti not fair that the poor don't have much in these retirement plans and the money should be distributed fairly.
