NEW: The govt. wants your 401(k) plan

Nov. 30, 2012

Katy Grimes: With the recent Democratic reelection win by the Obama administration, get ready for more than tax increases.

The government now wants your private 401(k) retirement plan.  ”As Washington debates what to do about the fiscal cliff that it foolishly created, many potential sources of new revenue will be thrown on the table. One of them is likely to be 401(k) plans,” Investor’s Business Daily reported Thursday.

“Retirement is an American’s reasonable expectation. We put money into investment plans so that our work today funds our hard-earned leisure of tomorrow. But many in Washington see our investment accounts not as the expressions of well-planned, disciplined decisions but as untapped reservoirs of wealth they can drain to fix the problems that they caused.”

There’s a great deal of money saved by private sector employees in 401(k) plans. But liberals in government say that these retirement accounts aren’t fair, and that they are the retirement plans of the wealthy.

More than 60 million American workers have a 401(k), 403(b) or 457(b) plans. But taxing these accounts or lowering the amount that can be contributed to them tax-free would do little to close the deficit and cut the debt, IBD said.

“Total assets in 401(k)s are roughly $3 trillion. So even if they were seized in their entirety, they would merely retire less than 19% of Washington’s $16.3 trillion debt.”

Since first election Barack Obama, his government liberals have been saying that our 401(k) exist on the backs of the poor, as if they had all the money and it was stolen by the rest of us.

The truly scary part is that I have no doubt that a majority of the people who voted to reelect Obama will not have a problem with the government claiming ownership of Americans’ 401(k) plans.  It’s the only fair way to level the playing field.

“But many in Washington see our investment accounts not as the expressions of well-planned, disciplined decisions but as untapped reservoirs of wealth they can drain to fix the problems that they caused,”

The war on women is nothing. ”The war on retirement, particularly 401(k)s, is quiet now. But that’s because it’s a cold war,” IBD said.

In 2008,  Teresa Ghilarducci, an economist from the New School, first suggested to Congress the idea going after 401(k)s. One of California’s Congressmen, George Miller, a Democrat, loved the idea. ”George Miller, who runs a congressional committee, Democrat in California, came out with the first notion of just getting rid of your being able to deduct for your income your contribution to your 401(k)…” He said we have to eliminate the ’401(k) tax subsidy’ back in 2008,” Rush Limbaugh reported on his radio show Thursday.

Did Miller call this a “tax subsidy?”

“The government’s losing $80 billion by allowing you to deduct from your gross income, your taxable income, whatever you contribute to your 401(k), and they wanted to take that away. They had a hearing. They actually had a hearing on this back in 2008 where they heard from this professor. Ghilarducci appeared and she said, ‘I’ve got a better plan,’” Limbaugh reported.

“What we want to do, we want to take your 401(k) at its August level, before the crash. We’ll give you that equivalent and put it in your Social Security account, essentially, and we’re going to invest that money that we take from your retirement account, your 401(k), at its August level. We’re going to buy government bonds with it, which will guarantee you 3% — and then we will require that you put 5% of your pay into your 401(k) although it’s not yours anymore,” Ghilarducci said to Congress.

IBD warned that the hostilities might be closer than many of us think. “The American Society of Pension Professionals and Actuaries launched on Monday, according to Reuters, “a media campaign intended to educate U.S. employers and workers that the federal government might consider changing the tax benefits of retirement savings accounts.”

“A website set up by the ASPPA advises account holders to tell lawmakers to ‘keep their hands off your retirement savings’ and explains that ‘Congress needs to reduce the deficit, and part of deficit reduction will most likely be ‘tax reform’ that increases tax revenue’ — the strong suggestion being that Washington is coming after Americans’ 401(k)s,” IBD said.

Read more here: http://news.investors.com/ibd-editorials/112812-634984-401k-on-the-table-for-fiscal-cliff.htm?p=full

Be sure to read the comments left by readers on the IBD story.