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Congress mulls major 401(k) changes

Specop 007

Diamond Member
Jan 31, 2005
9,454
0
0
Yay! The .gov hasnt messed with the financial markets enough. Now its time to go for the big nest eggs too! I'll bet within my lifetime the tax exempt status of Roth investment vehicles is removed as well and you'll be taxed on those pay outs.

Hooray for socialism, hooray for equality for all!

Article

Congress mulls major 401(k) changes

A wide range of sweeping changes to the 401(k) system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans.

Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.

This was suggested by the chairman of the House Committee on Education and Labor.

?With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,? Rep. George Miller, D-Calif., said.

?We?ve invested $80 billion into subsidizing this activity,? he said, referring to tax breaks allowed for 401(k) contributions and savings.

With savings rates going down, ?what do we have to start to think about in Congress of whether or not we want to continue and invest that $80 billion for a policy that is not generating what we ? say it should?? Mr. Miller said.

Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.

When workers collected Social Security, the guaranteed retirement account would pay an inflation-adjusted annuity under her plan.

?The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,? which goes to the highest-income earners, Ms. Ghilarducci said.

That simply results in transferring money from taxed savings accounts to untaxed accounts, she said.

?If we implement automatic [individual retirement accounts] or if we expand the 401(k) system, all we?re doing is adding to this inefficiency,? Ms. Ghilarducci said.

Rep. Robert Andrews, D-N.J., raised the issue of which investment advisers are allowed to offer workers investment advice.

The Department of Labor is considering ?loopholes? that would allow advisers to offer ?conflicted investment advice if the advisers work for subsidiaries of financial services companies that sell the investments,? he said.

With American workers facing $2 trillion in losses from retirement plans over the past year and Democrats expected to gain seats in the House and the Senate, actions being contemplated by the committee are an important harbinger of what could come out of Congress next year.
 

OCGuy

Lifer
Jul 12, 2000
27,220
26
91
Originally posted by: bamacre
Punish those who save, and prop up those who borrow.
Indeed. Punish those that work hard and develop a skill that someone deems worthy enough to pay well, and prop up those that drop out of high school and pop 3 kids out with no financial planning.
 

glenn1

Lifer
Sep 6, 2000
25,383
1,013
126
This is an incredibly stupid idea, but it's from Congress so that's a tautology.

Honestly, we can't start a thread over every stupid idea from Congress, otherwise anandtech couldn't afford all the extra servers needed.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
I have wondered before what stops the gov from, in the case of a roth, backtracking and deciding "Oh sorry these are taxable, but only at 10%, so don't complain too much or it will be 20%, now fug off".

I cannot get the link to work and i don't know how much traction this has but if they fvck around with 401k they better let us lock-in what's already in them and keep them there until they expire however many decades down the line.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
2
0
Originally posted by: glenn1
This is an incredibly stupid idea, but it's from Congress so that's a tautology.

Honestly, we can't start a thread over every stupid idea from Congress, otherwise anandtech couldn't afford all the extra servers needed.
don't worry, anand can use credit cards and if he over extends just get a bailout!
 

Double Trouble

Elite Member
Oct 9, 1999
9,272
103
106
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
 

Zorba

Lifer
Oct 22, 1999
10,008
4,038
136
There is no way congress will ever completely screw 401k or Roth, they are way too popular. It would be political suicide to screw with them.
 

SSSnail

Lifer
Nov 29, 2006
17,461
80
86
No, this is when we need to grab our torches and pitch forks and take back the government, a government that no longer does what's best for its citizens.
 

Starbuck1975

Lifer
Jan 6, 2005
14,663
1,887
126
How exactly are the Democrats enjoying the perception of having better ideas for managing the economy?
 

scruffypup

Senior member
Feb 3, 2006
371
0
0
The stupidity in this is that the so called tax breaks for the rich are there for the poor as well. There is a 401K limit of contributions, so the "rich" are capped to a low limit of tax breaks, yet the "poor" and the middle class can use this as a tax break and if they plan it right get extra tax credits in the form of the savers tax credit that the "rich" cannot get. The problem is that 401K programs are underutilized by those people that could most benefit them due to ignorance.

A quick example of someone making say $25k a year,... contribute $2k into a 401K, there will be a tax savings on that $2k of probably $200, then a savers credit of $1000 so there is an immediate return of 60%, then you factor in the growth over time and it is perfect to supplement their social security income (which might not be as much as someone who made $50k throughout their lives) and it only cost them in real income $800 each year for $2000 invested with growth.

The second thing is that any proper 401K program will have a government bond fund and money market fund, which is pretty much what they are saying people should be allowed to switch to outside of the 401k,... yet is not appropriate for people to switch out of if they are younger, since they would then be locked in at a low growth rate which doesn't outpace inflation by as much as a diversified mix of stocks and bonds.

I swear the people who come up with crap like this have no clue and want to punish those who are successful. If things went entirely their way, there would be no incentive to work harder than the person next to you and we really would see the downfall of America.
 

OneOfTheseDays

Diamond Member
Jan 15, 2000
7,052
0
0
Diversify, diversify, diversify. It is never a good thing to have all your eggs in one basket.

I have tons of money in my 401k, a good bit in my company's stock plan, another good chunk in a savings account, and another chunk in a CD.

Start saving early. I'm only 24 and even after putting away all this money and paying all my expenses I still have enough to live the life I want to live.
 

Sacrilege

Senior member
Sep 6, 2007
647
0
0
Originally posted by: Skoorb
I have wondered before what stops the gov from, in the case of a roth, backtracking and deciding "Oh sorry these are taxable, but only at 10%, so don't complain too much or it will be 20%, now fug off".

I cannot get the link to work and i don't know how much traction this has but if they fvck around with 401k they better let us lock-in what's already in them and keep them there until they expire however many decades down the line.
This is a very good point. A young person today might be hoping to retire in 40 to 50 years. Look back at the financial world 40 or 50 years ago, and how drastically different it was. Maybe the concept of retirement is an aberration that future generations won't be able to count on.
 

ranmaniac

Golden Member
May 14, 2001
1,939
0
76
?We were founded on a very basic double standard. This country was founded by slave owners who wanted to be free. Am I right? A group of slave owners who wanted to be free, so they killed a lot of white English people in order to continue owning their black African people, so they could wipe out the rest of the red Indian people and move west and steal the rest of the land from the brown Mexican people, giving them a place to take off and drop their nuclear weapons on the yellow Japanese people. You know what the motto of this country ought to be? You give us a color, we?ll wipe it out.?

?The real owners are the big, wealthy business interests that control things and make all the important decisions. Forget the politicians, they?re an irrelevancy. The politicians are put there to give you the idea that you have freedom of choice. You don?t. You have no choice. You have owners. They own you! They own everything! They own all the important land. They own and control the corporations. They?ve long-since bought and paid for the Senate, the Congress, the statehouses, the city halls. They?ve got the judges in their back pockets. And they own all the big media companies, so that they control just about all of the news and information you hear. They?ve got you by the balls! They spend billions of dollars every year lobbying - lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else!
.
?But I?ll tell you what they don?t want. They don?t want a population of citizens capable of critical thinking. They don?t want well-informed, well-educated people capable of critical thinking. They?re not interested in that. That doesn?t help them. That?s against their interests. They don?t want people who are smart enough to sit around the kitchen table and figure out how badly they?re getting fucked by a system that threw them overboard thirty fucking years ago. You know what they want? Obedient workers - people who are just smart enough to run the machines and do the paperwork - but dumb enough to passively accept all these increasingly shittier jobs with the lower pay, the longer hours, reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. And now, they?re coming for your Social Security. They want your fucking retirement money! They want it back so they can give it to their criminal friends on Wall Street. And you know something? They?ll get it! They?ll get it all, sooner or later, because they own this fucking place. It?s a big club and you ain?t in it. You and I are not in the Big Club.?

- George Carlin, may he rest in peace. :(
 

Special K

Diamond Member
Jun 18, 2000
7,098
0
76
Originally posted by: Specop 007


Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.

This was suggested by the chairman of the House Committee on Education and Labor.

?With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,? Rep. George Miller, D-Calif., said.

?We?ve invested $80 billion into subsidizing this activity,? he said, referring to tax breaks allowed for 401(k) contributions and savings.

I don't understand what they mean here. A 401k is a tax-deferred account. You get a tax break now when you make contributions, but when you withdraw the money at retirement it is taxed as normal income. Why are they complaining about tax breaks when anyone in retirement who is drawing down their 401k account is paying regular income tax on that money?

Also, what does being "higher-income" have to do with it?
 

Craig234

Lifer
May 1, 2006
38,548
345
126
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
After the Democrats built the middle class for decades and the last 25 years screwed the middle class, you are still clueless about the parties and who they represent.
 

HannibalX

Diamond Member
May 12, 2000
9,361
2
0
Originally posted by: OneOfTheseDays
Diversify, diversify, diversify. It is never a good thing to have all your eggs in one basket.

I have tons of money in my 401k, a good bit in my company's stock plan, another good chunk in a savings account, and another chunk in a CD.

Start saving early. I'm only 24 and even after putting away all this money and paying all my expenses I still have enough to live the life I want to live.
Good advice.
 

RichardE

Banned
Dec 31, 2005
10,246
2
0
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
If it passes republicans are going to have to vote for it, and a republican president will have to approve it.
 

quest55720

Golden Member
Nov 3, 2004
1,339
0
0
Originally posted by: RichardE
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
If it passes republicans are going to have to vote for it, and a republican president will have to approve it.

Not if this comes up next year. There is 100% chance Obama wins. There is a 50% chance the dems will get 60 seats in the senate. There is a good chance this shit could pass with out 1 single republican vote. Obama would rubber stamp it in a second. It is shit like this why we need split government. I rather like my 401k the way it is personally.
 

RichardE

Banned
Dec 31, 2005
10,246
2
0
Originally posted by: quest55720
Originally posted by: RichardE
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
If it passes republicans are going to have to vote for it, and a republican president will have to approve it.

Not if this comes up next year. There is 100% chance Obama wins. There is a 50% chance the dems will get 60 seats in the senate. There is a good chance this shit could pass with out 1 single republican vote. Obama would rubber stamp it in a second. It is shit like this why we need split government. I rather like my 401k the way it is personally.
Why bring it up now if they wanted to wait for a D pres? It was brought up Tuesday. I'll bump this for ya when Repubs vote for it, just like how the repubs voted for the socialization of the US. Its a bi-partisan effort, the socialization.
 

Specop 007

Diamond Member
Jan 31, 2005
9,454
0
0
Originally posted by: RichardE
Its a bi-partisan effort, the socialization.
THIS!!! THIS THIS THIS!!

All these goddamn dumbasses toeing the party line "Well, we gotta vote out Party A and get Party B in there!! They'll fix it!!" Its all BULLSHIT! You want HOPE and CHANGE? Vote in some third party candidate. Otherwise, we're all voting the same regardless of what the little letter by their name is!
 

Mursilis

Diamond Member
Mar 11, 2001
7,756
11
81
Originally posted by: Craig234
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
After the Democrats built the middle class for decades and the last 25 years screwed the middle class, you are still clueless about the parties and who they represent.
The Democrats "built" the middle class? That's only true in your house of worship, the High Church of Government. And the middle class was screwed the last 25 years? There was a two-term Democratic President and a Democratically-controlled Congress part of those years, wasn't there?
 

Genx87

Lifer
Apr 8, 2002
41,061
494
126
Originally posted by: quest55720
Originally posted by: RichardE
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
If it passes republicans are going to have to vote for it, and a republican president will have to approve it.

Not if this comes up next year. There is 100% chance Obama wins. There is a 50% chance the dems will get 60 seats in the senate. There is a good chance this shit could pass with out 1 single republican vote. Obama would rubber stamp it in a second. It is shit like this why we need split government. I rather like my 401k the way it is personally.
I talked about this a few months ago. A defacto dictatorship if Obama gets the super majority.
 

dmcowen674

No Lifer
Oct 13, 1999
54,894
46
91
www.alienbabeltech.com
Originally posted by: Genx87
Originally posted by: quest55720
Originally posted by: RichardE
Originally posted by: Double Trouble
This is the kind of stuff we have to look forward to when you have an all-democrat congress and president. Clearly, those "rich people" have used this incredible loophole to steal from the poor, they need to be punished for saving. I say we just take away their 401(k) and call it part of their "patriotic duty" to help the country. Then we can take all that 401(k) money and distribute it to those "disenfranchised" people who never saved anything.
If it passes republicans are going to have to vote for it, and a republican president will have to approve it.

Not if this comes up next year. There is 100% chance Obama wins. There is a 50% chance the dems will get 60 seats in the senate. There is a good chance this shit could pass with out 1 single republican vote. Obama would rubber stamp it in a second. It is shit like this why we need split government. I rather like my 401k the way it is personally.
I talked about this a few months ago. A defacto dictatorship if Obama gets the super majority.
and it wasn't a Bush/Republican dictatorship? :confused:
 

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