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401(k) Seizure Threats Rise To The Surface Again

12 October 2010 9 Comments

Rumors are flying again regarding certain Democratic Senators pushing for legislation for the government to seize private 401(k) plans in an attempt to bailout Union pensions and distribute retirement funds in a more “fair” manner.  Make no mistake, if this kind of crap happens – and it might actually be attempted to be pushed through with a lame duck congress in the coming months – there will be a serious uprising in this country.

This is straight up theft, where people have been allocating their own money towards their own retirement, not towards someone else’s retirement.  How anybody could be in support of such a piece of legislation is absolutely insane.  This single issue alone should be enough to not vote Democrat.

What the hell is Social Security for?  Isn’t that the mechanism that is in place already to assist people with retirement income?  Why would the government need to steal individual saving accounts?  Oh yeah, because social security is broke, and the government doesn’t like individuals having control over anything.  This is pure insanity.  If this crap even comes close to happening, there is going to be serious s**t hitting the fan.

You can read more about this here.

I’ll be watching this and will definitely update the blog with various news on this front.

Absolute insanity.

9 Comments »

  • Stephan said:

    While this would be absolute insanity if it did happen, i cant believe you actually think it will? Relying on the site you gave as a source, a conservate news forumn is not really any indication at all that it will, especially not in the time frame you have stated. But either way thanks for bringing this up so people at least know that this is something Washington is looking at.

  • TaJ said:

    @Stephan – here's the, unsurprisingly much rosier, take from the more liberal Huffington Post: http://www.huffingtonpost.com/saul-friedman/a-nov

    How is this really different from "privatizing social security", which was such an unpopular disaster for the Republicans, though? Are the Democrats really stupid enough to go for that? Wait, don't answer that.

    Kevin does have the core of the problem though – say you end the tax deduction on new contributions to 401(k) accounts (it would not surprise me if they try and get rid of tax-advantaged accounts like 401, 403 and Roth). What happens to the old accounts? Are they 'grandfathered in'? Do you have to roll them into taxable brokerage accounts somehow? The conservative blog freakout is about the possibility that they'll simply be absorbed by the new retirement regime and vanish in a puff of accounting.

    Losing the tax advantaged status on retirement accounts would be painful, but these are painful times. I honestly wouldn't even be mad. Losing the *contents* of those accounts, on the other hand, well, f*** a bunch of *that*.

    The pension crisis isn't just something people made up to yell about on blogs, though, so I expect the government to try *something*. If not this plan then something else.

  • Stephan said:

    i agree Taj, this is defintiely a crisis that we will have to deal with for the foreseeable future. I do think government will try something, and im glad you found a liberal view on this. I was just pointing out that saying this will be passed in a lame duck session of congress within 3 months was jumping the gun quite a bit. we know how slow government is, there is no way anything this radical would get done in 3 months, ever!

  • 20smoney said:

    Never understood why anyone would be against "privatizing" social security. There is no funds allocated for future SS. None. Privatizing would mean individuals would actually have funds set aside for retirement versus having funds taxed and allocated into the general spending budget for the year.

    The alternative is that there is still no money set aside for SS, just future promises to print & borrow

  • TaJ said:

    Living in a state that's been bitten by privatization fever, all I can say is that privatizing combines all of the flaws of government programs with all of the flaws of corporations. Not only are we corrupt and inefficient, we're totally unaccountable and immune to transparency laws! Yay!

    I fail to see what benefit privatizing social security would provide over the current situation. Sure the social security trust fund is full of Treasuries, but that's not the same as going broke and having nothing to show for it. We as a country made the decision to fund tax cuts by moving trust fund assets into the general budget and replacing them with Treasuries (the "IOUs"). The only difference there would be in a privatized concept would be that this money would be completely gone and unrecoverable – see Enron, S&L crisis, etc. At least the IOUs collect interest!

  • updawazoo said:

    If that happen, I'll just cash out my 401K pay the bullshit tax and put it into something tangible or hard assets like rental property, commodities, etc. I'm so and sick and tired of our incompetent gov't stealing and taxing our hard earn dollar to pay for some else failure. that is why america is becoming a 3rd world country and we use to be a creditor, now we are a debtor nation. what a joke. when u failed in american, u are being rewarded. when u succeed, you are being screwed over.

  • bOBBIo said:

    Sorry to bust your balloon. The SS Trust Fund is NOT full of Treasuries. No TBills, no T Notes, nada of value. It is just paper promises to back the fund with Treasuries IF NEEDED. There is NOTHING OF INTRINSIC VALUE OR TRADABLE.

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