Not my 401K!

The democrats have set their sights on the next item to be raped by their pathological need to control every aspect of our nation. Their next target is the pensions and savings the people have set aside to supplement their retirement. I’m included in that population segment.

I’m approaching retirement next fall. I was kicked loose by my employer last December. Because of my 18 year tenure, I accumulated enough time for a severance package that will, with some husbanding, last until next October. Then I have a decision to make.

In October, I will be age 63. I can retire at that time and accept reduced payments from the Social Security Administration and my corporate pension plan. Normally, I would be eligible for full SSA payments at age 66. That amount is reduced for every year earlier. I would be eligible for full pension from my employer at age 65. That amount is reduced by 5% every year earlier. If I retired at age 63, that would mean a full 10% less for my pension.

I would prefer to wait until March 2011, when I’m 64 to retire. Waiting that long would increase my SSA and company pension payments significantly. So, the decision is how to subsist from October 2010 until April 2011. The obvious answer is through my savings—my 401K for example.

Like most Americans, my 401K is not infinite. My adviser has said that I can withdraw 4-5% per year and have a realistic expectation that the fund will last the rest of my life. Given the sum of my expected SSA and pension payments, I could add increase my monthly retirement income by 1/3rd.

That is IF I can retain control of my 401K. The democrats think they can manage my money better than I.


Nancy Pelosi has said that retirement funds should be managed to guarantee equal amounts. That is my retirement funds, including my life-time savings, must be managed to let those who have done nothing for retirement receive an equal amount. In other words, my money will be stolen by the government and given to those who have saved nothing, those who have not worked and slaved, and have not saved, nor planned for retirement. The money will be used to subsidize union pension plans who are running out of money through the union’s mismanagement, theft and malfeasance.

That is theft by governmental fiat. I worked for every penny of my savings and NO ONE will take it from me!

Federal Mutual Fund

Posted 05/11/2010 06:32 PM ET

Government Retirement: Democrats have obliquely admitted they covet Americans’ pensions. Last week, congressional Republicans told them to stay away. The shame is that they had to do anything at all.

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American Freedom And Prosperity Under Attack

The first rumblings were heard in the 1990s, when Democrats were said to be coming after our retirement accounts. Back then, the warnings were easy to pass off as hyperbole or a cranky conspiracy theory. Today, they pass as prescient.

In January, Bloomberg reported the “U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and individual retirement accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry.”

Alarms went off. In February, former House Speaker New Gingrich and policy analyst Peter Ferrara warned in our “On The Right” column that “Washington is developing plans for your retirement savings.”

“The idea,” they said, “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. … 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.”

Last week, Connie Hair wrote the following in Human Events about the Annual Report of the White House Task Force on the Middle Class released in February:

“The radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement — which lets them off the hook for their collapsing retirement scheme. And, of course, the Obama administration is eager to accommodate their buddies.”

Hair says a “backdoor bull’s-eye is on your 401(k) plan and trillions of dollars the government would control through seizure, regulation and federal disbursement of mandatory retirement accounts.”

Republican lawmakers are taking the threat seriously. They have expressed to the administration through a letter their “strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans.” These congressmen know that among their Beltway brethren there exists an eagerness to “essentially dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan.”

This isn’t the first time Democrats have eyed Americans’ retirements. In 1993 the Washington Post reported that the Clinton administration considered an “unprecedented effort by the federal government to deal with its budget woes by turning to the more than $4 trillion in cash, stocks and other investments held by pension funds.”

They made another pass in 2008, when Teresa Ghilarducci, a professor at the New School of Social Research who was invited by Democrats to testify, brought the idea of government “guaranteed retirement accounts” to the House subcommittee on income security and family support. Such accounts would be administered by the Social Security Administration. “Contributions” would be required and the payout would be a lean 3%.

Ghilarducci didn’t suggest that 401(k)s be eliminated, but she didn’t have to. She supports removing the favorable tax treatment they receive, which would virtually destroy their reason to exist.

To close the loop, we refer back to the White House’s middle-class task force report. It mentions guaranteed retirement accounts as a way to “give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk and, in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

Or, as Gingrich and Ferrara say, the government would treat ostensibly private retirement savings the same negligent way it’s treated Social Security. Let’s not forget: The courts have ruled that Washington isn’t obligated to pay back a dime it’s seized from paychecks to fund Social Security.

Don’t think Washington would never wreck private pensions in the name of the collective good. It happened in Argentina, and if the same group that’s determined to take over the U.S. health care system stays in power long enough, it could happen here.

4 thoughts on “Not my 401K!

  1. The unfortunate part is that unless you withdraw it all (and I imagine put it into non dollar denominated investments like property that will produce income) if .Gov decides tomorrow that your 401K is going to be seized what can you do to stop it?

  2. Ryan, I am old enough that I can withdraw the entirety of my 401K without penalty other than paying income tax on the sum (which might be a good idea while the Bush tax cuts are still in effect.)

    That may be an option and convert a large portion of that sum to hard cash and other assets.

    I have options—just less desirable ones.

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