Plans Simmering For the 401(k) Grab
I heard Rush Limbaugh speaking about some ideas by the Congress to eliminate the 401(k) plan as we know it. Rep. George Miller said
“With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market…We’ve invested $80 billion into subsidizing this activity.”
I have some issues with Rep. Miller. Not well-devised? How so? Market goes up, you make more, market goes down, you make less. Anyone who started a 401(k) almost thirty years ago and is retiring now will probably have a monthly benefit greater than his or her Social Security benefit.
Plus, if you make $80,000 in your final year of employment before retirement, you get the same benefit as a W-2 worker who earned $1 million.
And Rep. Miller, what’s this “We’ve invested” stuff? ‘We’, as in ‘you’ personally? The governmental members? The taxpayers? You make it sound like you laid the money out of your pocket.
And Rep. Miller, do you think the robust Reagan and Clinton economies would be possible without the BILLIONS of 401(k) investments made during the 80′s and 90′s? I must insist that you put down the Kool-Aid cup, sir!
Mr. Limbaugh went on to state the following points about the transfer of 401(k) funds to the Social Security Administration’s (SSA) control:
- Formerly tax-deferred deductions to 401(k) accounts would be made to the SSA, forcing up an individual’s adjusted gross income (AGI)
- According to ‘The Obama Tax Plan’, a higher AGI could make small business owners reach the $250k level.
- The SSA would pay a guaranteed 3% rate on investments. (Not saying when the interest would be credited, using the rule of 72, it would take approximately 24 years for investments to double).
- Upon your death, 50% of your account balance could go to your heirs. (THAT IS A DEATH TAX OF 50%!!)
While Mr. Limbaugh made some excellent points, I have a few to add:
- SSA withholding goes into the general fund an an ‘IOU’ is given back to the SSA. The IOU’s to SSA and medicare are approaching $60 TRILLION dollars – no SSA fund exists.
- The reporting of SSA withholding reported as income makes the budget deficit look smaller, or create a false surplus, in the case of the Clinton years. Had the SSA funds gone into the SSA separately, Bush 43 would have no surplus to squander.
- Seeing that the SSA expenditures will outpace inflows by around 2018, we will have to BORROW just to pay beneficiaries.
This is just plain wrong. Government caused the current Social Security mess – do we want them to overspend EVEN MORE and create a mess of your 401(k) too?
There is no doubt that this current financial crisis has shaken Americans to the core, but how we proceed will just as important. It’s up to government to foster an environment of opportunity instead of exploiting the fears of us citizens in an attempt to socialize opportunity.
Biden: CEO Pensions “Go First” (And Your 401(k) Will Go Next) – RushLimbaugh.com
Congress mulls major 401(k) changes – Investment News
Real budget deficit: $4 trillion – WorldNetDaily
