Feds Eye 401k’s in Debt Balancing Discussions

Feds eye retirement-fund tax to cut $16 trillion-plus deficit New York Post ^ | 8:25 AM, April 22, 2012 | By GREGORY BRESIGER

Posted on Sunday, April 22, 2012 7:46:02 PM by DeaconBenjamin

Uncle Sam, in a desperate attempt to fix its $16 trillion-plus deficit, is leering over Americans’ retirement nest egg as its new bailout fund.

Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.

A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.

Besides 401(k)s, other possibilities include the mortgage-interest deduction on second homes, as well as benefits from employer-provided health insurance, which are untaxed now.

Under current 401(k) rules, total employee/employer contributions can’t exceed $50,000. In the proposed rule change, employer/employee contributions would be limited to 20 percent of the employee’s compensation, with a maximum of $20,000, the so-called 20/20 proposal.

Another proposal being discussed in Congress says all tax deductions on 401(k)s and IRAs to be replaced with an 18 percent credit. The credit, according to a proposal that has been endorsed by economist William Gale, would be placed directly in a person’s retirement account.

“Unlike the current system,” Gale told Congress, “workers’ and firms’ contributions to employer-based 401(k) accounts would no longer be excluded from income and would be subject to taxation, contributions to IRAs would no longer be tax-deductible and any contributions to a 401(k) plan would be treated as taxable income.”

In other words, the employee and employer would no longer get a deduction under the Gale plan, they would qualify for a credit. And the credit would “increase [government] revenues by about $458 billion,” Gale says.

(Excerpt) Read more at nypost.com …

SEIU Wants to Manage your 401-K

Bend Over America: Now The SEIU Wants Your 401k!

Having ruined the pension funds of Americans nationally through corrupt and utterly unsustainable “projections” of future growth labor unions are now targeting your money to make up the difference:

One of the nation’s largest labor unions, the Service Employees International Union (SEIU), is promoting a plan that will centralize all retirement plans for American workers, including private 401(k) plans, under one new “retirement system” for the United States.

In effect, government pensions for everyone, not unlike the European system and regardless of personal choice.

Yes, because labor unions have done such a great job of managing their pension plans, right?

For full article: http://market-ticker.denninger.net/archives/2121-Bend-Over-America-Now-The-SEIU-Wants-Your-401k!.html

Government Control of your 401(k); More class warfare

     Should the federal government be able to decide where and how your 401(k) contributions will be invested?

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=521423

 

“In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.”“They will tell you that you are “investing” your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.”

Pros? Cons?