The Government Wants to Steal Your 401kWednesday, February 15, 2012 | Teeka Tiwari
31 Comments
4.3 Trillion dollars sits in our nation's 401k Retirement Plans. It’s too big a temptation for the Federal government to ignore, and we may be on the verge of a full scale attack against our citizens' privately held wealth.

I'll get to the details of that in a moment. For the benefit of our foreign readers, a 401k is a retirement plan. The advantage of a 401k is that all money put into it can be taken as a tax deduction against your income. So, in effect, the government subsidizes a good portion of your retirement savings. This is one of the greatest gifts the Federal government has ever given us, because our money is allowed to compound completely tax free!

Now it's not all gravy -- you can't touch this money until you are 59 1/2, and when you start pulling money out you are taxed at ordinary income levels. This is regardless of whether your gains came from long term capital gains or dividend income. At this time, ordinary income rates are, generally speaking (depending upon your tax bracket), higher than capital gains rates and dividend income rates.

So the government gets their money in the end, which is why these are considered tax deferred plans, not tax free plans.

The advantage for the saver to contributing to a 401k is that contributions are tax deductible, meaning they get to grow their money for decades without the relentless performance drag of having to pay capital gains and dividend income tax each year.

This means that the government is providing you with an ongoing interest free loan for the life of your 401k. This "loan" allows you to compound more money... faster... for free. You are using other peoples' money (OPM) -- in this case the government's money -- to boost your gains.

For years this has been a phenomenal wealth creation tool for everyday Americans, but this great gift could be under serious threat.


The Unions Want Your Money

The unions have a problem: They have massive pension obligations that are woefully under funded. Some reports indicate that their pension funds are only 62% funded, with total shortfalls approaching $165 billion.

Their approach is to convince the government to take custody of ALL 401k assets and effectively nationalize them into a government guaranteed annuity that will pay about 3%. That's a rate that will guarantee that you lose money after inflation.

One of the largest contributors to the Obama cause is the Services Employees International Union (SEIU). They are the "face" organization behind this plan to centralize America's savings into "Guaranteed Retirement Accounts" (GRA's).

Now, guess where those 4 trillion 401k dollars will end up being invested?

The recipient of all this largesse will be US treasuries. This is a triple win for the Obama administration, the Federal government, and the unions:

The unions get to bail out their under funded pension funds by delivering guaranteed returns which, as measly as they are, are better than zero returns. The democrats get to return the favor back to the unions for their long term support. And the Federal government gets to use our money to help fund the federal deficit.

The sales pitch being used is that this should be done to save Americans from the "emotional ups and downs" of the stock market! How galling is that?

But even if this nationalization effort fails to pass, savers are still being assaulted by the Obama administration.

Let me explain...

In the most recent budget, the President is proposing restricting the amount of money investors can put into 401k's! The President's administration apparently feels that the best way forward is to PUNISH SAVERS!

Not only that, but we also saw that the President wants to boost dividend taxes from the current 15% to a whopping 40%! The actual top bracket with the inclusion of the Obama Care tax will be 43.5%. Oh, but don't worry, because this is just for those evil blood suckers making $250k a year.

Let me tell you something, depending upon where you live, $250k is not a lot of money. Even if you live in a low cost area of the country, $250k does not make you one of the glittering rich.

You might not be rich right now, but it is every American's right to strive to become rich if they so desire. That's a big part of the American dream -- work hard, build a business, live beneath your means and enjoy the fruits of your labor. It is precisely that striving for personal greatness that makes our entire country great.

Why should the entire nation be held to the standards of people who can't make good decisions for themselves? It is not only wrong, but it is destructive to our way of life. We are a people that firmly believe in the right to determine the direction of our own lives. We don't need a bunch of narrow minded Washington pukes telling us what's good for us.

It is not unimaginable that this legislation will pass, because crazier things have happened in our country's history. For instance, back in 1933 under Executive Order 6102, all privately held gold was confiscated by the US government.

You were compelled to sell your gold to the Federal Reserve for $20 an ounce under penalty of 10 years in prison. The Federal Reserve then promptly sold the bulk of the gold for $35 an ounce to the Europeans while pocketing the difference.

What's to say that they won't do the same thing with our 401ks?

Good post

Oh crap this is scary!!

Should be more scary to the folks Dguidry's age than anything! The younger generation has time to adjust and say screw 401k! The government will take it anyway, and spen thier money on themselves!!!

What scares me more is people who voted for him!!!

soooo....for us dumb people......what do??? invest all in ira??
i have 2 401k and 1 ira.....left 401k open from last company because it didnt penalize for taking out for college.
came to this company and their shit was franklen timpetton ira crap.
at the beginning of this year they changed to a 401k.
i left the ira alone and just started contributing to their 401k....
mainly because i dont know jack shit about either one.
all i knew is that 10% of my income was not being taxedfor the past12 or so yrs.,and i will never see it unless i live to be 70,which i doubt.
now i got eggs in three baskets.....what kind of omlet should i make???
seriously.

The best omelet is the one where u mix everything u can find into one. Don't forget jalapenas or whatever.

Obama is also going to start implanting mind control chips into newborn babies with their inoculations. These chips will activate at puberty and cause the drone children kill anyone who opposes the new socialist regime. For the good of the country please don't inoculate your children!

That sounds good bubba....im gonna roll over...and u kiss my ass!
I was asking chauvin...duuuh.

From Idacraw - "Obama is also going to start implanting mind control chips into newborn babies with their inoculations."


Nope, Obama does not need mind control chips. Obama has the MSM, MTV, and the multicultural education system (public schools) to do the mind control and indoctrination.

Romney lost the election, when he said "I am going to put America back to work". That sure did not jive well with the 47% that would prefer to live off money from other people working. Thus the reason we now have 47 million folks on foodstamps.

Idacraw- I notice that any time someone speeks truthfully about socialism or Islam, you get your hackles up. What gives?

Rock the Vote!

If you do not believe Obama supports the redistribution of wealth (socialism), then obviously you have not listened to him speak.

http://www.youtube.com/watch?v=UsapJii1rMY

Hopefully this link works, my duck dog decided my laptop needed some water so I'm using the smartphone.

Give this a read, seriously. Despite what your opinion of me, I do not support Obama out any president for that matter. I believe that they are all just talking heads to appease the masses while at heart or government never changes. There is no republicans out democrats, there is only the government and any change is purely a magic trick, you know "look at this washing hand and ignore the other one".

Nothing will change regardless of who is in "power", they all serve the same beast.

hmmmmm, you sure are quick to defend Obama and the policies of the left.

Idacraw comment - "believe that they are all just talking heads to appease the masses while at heart or government never changes"

You obviously are not paying attention, because much is changing. We are about to experience the largest tax increase in the history of the world - Obama Care

Our military was forced to accept degenerate sodomites who can now serve openly,

We now have 47 million Americans on Foodstamps

Liberals will not accept any budget that does not punish the wealthy

Obama declared in the 2nd debate that he will push for new gun bans.

Wake up and smell the poo poo

wow, you really are incapable of seeing the bigger picture and thinking logically. Sadly most of America is just as gullible as you.

Awe shit! Here comes Guidrys alter ego ..... Gonna have to change my signature