Who Wants to Confiscate Your 401(k) and IRA?
May 11, 2009 by Bob Livingston
If you’re like most people who are planning for retirement you have been socking away your money in an Individual Retirement Account (IRA) or 401(k) plan.
And when the Dow Jones Industrial Average reached 14,198.10 on Oct. 11, 2007, you thought you were set. The Dow was running up. Your retirement funds were growing. Everything looked good.
Then stocks began a downward slide that turned into a cliff dive by the following spring as the full extent of the financial crisis came to light. To make matters worse, the market then showed what it thought of the efforts of Congress and the President (both Bush and Obama) to stem the crisis—it tanked.
Fast forward to March 6, 2009. Stocks hit their lows and your retirement funds had dropped by 40 percent to 60 percent.
Now your retirement years no longer look quite so rosy. You’re thinking you may have to work an additional 10 years just to build that nest egg back to October 2007 levels.
Well, don’t fret, help is on the way. The same entity that’s done such a great job of managing Social Security may soon be managing your personal retirement plan.
Congressional Democrats have been holding hearings to decide what to do to help Americans prepare for retirement. Their conclusions: It might be a good thing for the government to eliminate tax breaks for 401(k)s, IRAs and similar retirement accounts, confiscate them and convert them to universal Guaranteed Retirement Accounts (GRA) managed by the Social Security Administration (SSA).
Now unions are joining the bandwagon. Ross Eisenbrey, vice president of the Service Employees International Union (SEIU), was quoted in a union publication saying that he supports a plan to centralize all retirement plans for American workers. His plan includes private 401(k)s and IRAs.
What he wants is for the government to confiscate your private retirement plan and set up a government pension system for everyone similar to the European system. And as is usual with grand government schemes nowadays, individual choice no longer applies.
The SEIU, by the way, is one of the nation’s largest labor unions and it invested heavily in getting President Barack Obama elected. Plus, the union is working with the left-leaning Economic Policy Institute and the National Committee to Preserve Social Security and Medicare on the plan.
In other words, the SEIU carries a lot of clout with this President and Democrat-controlled Congress.
But the SSA hasn’t done such a great job managing Social Security. According to the Congressional Budget Office, Social Security outlays will exceed revenue in 2019, and Social Security funds will be exhausted in 2049.
So, for a 20-year-old just entering the job market who will pay into the system for 40 to 45 years, there is no hope of recovering that money when he or she retires.
There is currently no bill in committee or before Congress to set up a GRA. But the fact that it’s being discussed in committees and pushed by Big Labor should be enough to frighten you.
It’s time to consider, if you haven’t already, your financial plans for your retirement years—whether you are 20, 70 or somewhere in between. Is it time to cash it out? That’s for you to decide along with a tax or financial advisor, as the penalties for early withdrawal are oppressive.
Regardless, as the Federal Reserve prints dollar upon dollar to fund its economic stimulus Ponzi schemes, gold as an investment looks better and better.