by Nancy Matthis at American Daughter
The Feds are looking for ways to seize retirement plans, IRAs, and 401Ks to finance their deficit spending. We first posted about this last August, when Republican US Representative John Carter (TX-31st) brought up the subject at a Tea Party Town Hall with his constituents.
Representative Carter informed the crowd that talk has been bandied about Congress to appropriate every state’s pension plans into the bankrupt Social Security System.
The current plan is much more egregious. The administration is looking at private plans, which are vulnerable to government takeover because they were developed under federal tax deferment guidelines. While this may seem preposterous, most of us would have thought that government seizure of banks and auto companies was preposterous before Obama redefined civil liberty.
Talk show host Neal Boortz posted about this in today’s Nealz Nuze:
THE GOVERNMENT WANTS YOUR RETIREMENT
….This, to me, is one of the most dangerous schemes currently slithering through the crevices and dark spots of the Imperial Federal Government in Washington. What am I talking about? What I believe to be plans by the Obama administration to, in effect, seize your retirement funds and use them to finance their deficit spending. Remember … there are more than $3 trillion dollars sitting out there in individual retirement, IRA and 401K plans. Politicians just cant stand the idea of this much money sitting out there in private investments … out of the grasp of politicians. So …. Something needs to be done. And sure enough, something is going to be done. The Treasury Department and the Department of Labor were going to start taking comments on ways to promote the idea converting 401(k) savings and IRAs into annuities or other steady payment streams….
A Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans under the Freedom of Information Act was filed by Phyllis C. Borzi, Assistant Secretary of the Employee Benefits Security Administration, Department of Labor and others on January 27, 2010. A copy of that document (the request) has triggered the current discussion. You can read it here. Ostensibly, she is concerned about the welfare of the workers:
The purpose of this notice is to solicit views, suggestions and comments from plan participants, plan sponsors, plan service providers and members of the financial community, as well as the general public, to assist the Agencies in evaluating what steps, if any, they could or should take, by regulation or otherwise, to enhance the retirement security of participants in employer-sponsored retirement plans and IRAs by facilitating access to, and use of, lifetime income or other arrangements designed to provide a stream of lifetime income after retirement.
Let us deconstruct this. Here’s how it would work. The government would seize the $3 to $4 trillion in assets currently invested in retirement plans. The government would now own all the assets, having taken them out of the private sector. That would be in return for a promise that the government would make timed payouts — monthly or whatever — to the pensioners over the coming years. The government has already betrayed the public trust by spending the assets in the social security trust fund, leaving worthless IOU’s as placeholders. Now they want to do this with our employee retirement plans and our personal retirement investments.
Are they actually talking about seizing the assets? Yes. Here are the thinly disguised words:
The Department of Labor and the Department of the Treasury (the “Agencies”) are currently reviewing the rules under the Employee Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code) to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement….
This plan may appeal to many timid souls, who are concerned about seeing their retirement assets shrink in a declining stock market. They may prefer to give a lump sum to the government now, in return for a promise of a fixed annuity that they can depend on. That is, of course, the traditional rationale for purchasing annuities. But the government can, at will, print money like it was toilet paper, so that although the dollar total of the annuity payment remains the same, its real value and purchasing power are substantially eroded.
So it is “six of one and half a dozen of the other.” Either you try to manage your own assets and watch the stock market decline, or you trust the government and let them shrink the value outside of your control. Either way, the government is the culprit robbing the people of what they have earned. The only way out is to keep control of your own assets, and replace the thieves in Washington with some fiscally responsible legislators.
The idea has been around for awhile. The filing of the information request in late January has revived the discussion. We should never let our guard down!
Washington’s Blog — Will Obama Seize Americans’ 401k and IRA Funds?
There is a rumor floating around that Obama will seize Americans’ retirement funds, like Argentina and some other countries have done. Two investment newsletters – Green Chip Review and The Mining Speculator – have recently claimed that the 401k seizure is a sure thing.
Bob Bauman — Obama: Curbing American Freedom
Long term Obama needs trillions more to finance his comprehensive program transplanting European-style socialism to America. That includes government-run health uncare, federal control of education, handing over faltering auto companies to unions, selectively bailing out his Wall Street campaign contributors and buddies, nationalizing banks, confiscating private pension funds and stimulus for all.
Carolina Journal — Dems Target Private Retirement Accounts
Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts “including 401(k)s and IRAs” and convert them to accounts managed by the Social Security Administration…. The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.
US News & World Report — Would Obama, Dems Kill 401(k) Plans?
I hate to use the “S” word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers’ retirement accounts… Now, even Uncle Sam isn’t that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker.
Politics Daily — Obama, Dems Seek to End 401(k) Plans
Democrats want to seize the money that workers currently invest in their 401(k) plans and replace the popular retirement savings accounts with a one-size-fits-all government sponsored retirement account. Under the scheme, Americans would be forced to transfer all of their hard earned retirement savings from their 401(k) to the government.
And here is some material appended from our earlier post — It’s Not a New Idea:
From the Friday, January 29, 1993 issue of the Washington Post we have this article (archived by the Seattle Times) — Budget Cuts Vs. Social Security — Tap Pension Funds Worth $4 Trillion, Panel Tells Clinton — Employers Sense Danger ‘Once They Get Taste Of This’:
A bipartisan government commission yesterday recommended to the Clinton administration that it launch an aggressive effort to tap the retirement funds of millions of Americans to help pay for rebuilding the nation’s roads, bridges and highways and give the economy a lift.
President Clinton has indicated past support for the concept, which would represent 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.
Some opponents in the pension industry, who worry about protecting retirees, said they fear Congress might revoke the generous tax treatment afforded pensions if they actively oppose the initiative.
The recommendations by the congressionally chartered Infrastructure Investment Commission, which has had the strong support of Senate Finance Committee Chairman Daniel Patrick Moynihan, D-N.Y., include establishing the National Infrastructure Corp. It would be a new government-sponsored corporation that would encourage at least $30 billion in investment by pension funds. Several billion dollars in seed money for the new corporation would come from a new energy tax now under consideration.
Energy tax. Sound familiar?
And two people who watched the Democratic convention in 1996 said:
I was absolutely horrified to hear the Democrats propose at their convention that the government should take money out of private pension funds to sink into yet more federal programs.
The Democrats have already raided the Social Security fund to pay for their unending government spending. We do not need them ruining our pension funds the same way!
This is another Democrat scheme to take even more of our money without having to face public opposition to tax increases. We already have to work over four months a year just to pay the taxes on our wages – we should not have to sacrifice our pensions, too!
Vote against the Democrats and Clinton while you still have money in your pension fund, or you may not have any pension fund left when you retire.
The Argentine government seized control of the private pension funds in that country last fall. At that time the Telegraph considered the possibility that other countries would follow suit — Argentina seizes pension funds to pay debts. Who’s next?, October 21st, 2008:
Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.
Should we worry about our pensions?
It is a foretaste of what may happen across the world as governments discover that tax revenue, and discover that the bond markets are unwilling to plug the gap. The G7 states are already acquiring an unhealthy taste for the arbitrary seizure of private property….
10:19PM Full Metal Patriot — Congress is planning to raid EVERY state’s pension funds to prop up Social Security. This blogger has done some background research, and reminds us of earlier attempts to “redirect” retirement assets:
This rumor definitely caught my attention. After doing a little investigation, it looks like it’s entirely true. Last year, House Democrats were contemplating abolishing 401(k) tax breaks and redirecting those funds into a new system of government-controlled retirement accounts to which all workers would be forced to contribute. And more information about the Democrats’ immoral plans to ransack every American’s personal retirement has been reported on CNN, The Wall Street Journal, and Carolina Journal. Now that they control both houses of Congress and have a big-government socialist in the White House, it looks as though Democrats are ramping up their machinations.
Update August 23, 9:13AM: A reader sends this link, possible reason for the federal government to get into a fight with the states; from the Financial Times — Pension funds back buy-out fight over bank deals:
A coalition of large US state pension funds has backed the private equity industry’s opposition to new rules on takeovers of troubled lenders, saying the plan would have a “chilling effect” on attempts to revive the country’s banking system.
The warning by funds from states including New York, New Jersey and Oregon, which manage billions of dollars on behalf of public workers and are big investors in private equity, will strengthen the buy-out industry’s lobbying against the proposed measures….
Update August 23, 9:13AM: Canada Free Press — Government seizing your IRA and/or 401k and rolling it over into the bankrupt Social Security Administration: And Then They Came For My IRA:
….when one mentions the idea of this government seizing your IRA and/or 401k and rolling it over into the bankrupt Social Security Administration, the usual reaction — even after all the evidence of the last six months — is scoffing. “They wouldn’t dare,” I heard from one individual. “There would be a revolt,” said another. Still someone else commented, “If you think there was outrage over this health care bill, let them try that!”
Well, maybe, but given the arrogance of these Statists, that is a natural next step. It is one that has been floated before, and don’t think that it has gone away. Consider that individual retirement accounts, be they private or corporate, have been accumulated tax free. In the eyes of Obama, Pelosi, Reid, et al, that translates into you getting away with something. Somehow you got “free” money. We’re talking about accounts totaling hundreds of billions (possibly trillions) of dollars! Believe me, they’re salivating….
After what we have witnessed so far this year, anything is possible today in America. And even if they don’t actually do it, imagine how much windfall revenue would accrue to the federal government if the American people only thought they were going to do it. An executive for a large Midwestern company told me: “I would pull every dime out of my 401k, pay the taxes and penalties and stick the cash in my mattress before I would let those (expletive deleted) have it!”
Could that be the plan?