Feds Want Our Pension Funds
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!
Related:
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?
[…] IS OBAMA PLANNING TO SEIZE PRIVATE PENSION PLANS TO … – Feb 04, 2010 · People who put money into a 401K do put it in before taxes are withheld and understanding that they pay the taxes when they take it out. It is getting …… […]
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Taking people’s pension funds and IRA’s is stealing.
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[…] IS OBAMA PLANNING TO SEIZE PRIVATE PENSION PLANS TO FINANCE DEFICIT? (The Millstone Diaries) […]
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Wether getting taxed today or tomorrow… doesn’t matter… it’s not free either way. You will pay your due with taxes. As an American on work visa in Canada… I’ve seen what socialism does. It creates higher taxes & longer wait times. This has happened because their government has gotten involved. Although… I agree with some things from the dems & some things from the republicans… I will def vote republican as it’s the lesser of the two evils. When will people wake up & realize that the two sides in themselves are not for the people. They are too busy bickering to get anything done. Neither Obama or Romney are what’s needed… we need someone who is willing to lay down the partisan rhetoric & actually do something for it’s people… ya know the ones who actaully fund this mess that’s been created. the national debt is much greater than approx 15 trillion… The current president likes to listen to himself talk waaaay too much… probably even watches himself on tv at night… or do they have tv on the 15 trillion vacations we the people have paid for?
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[…] the government can come in and take everyone's pension away. For associating with terrorisism. IS OBAMA PLANNING TO SEIZE PRIVATE PENSION PLANS TO FINANCE DEFICIT? THE MILLSTONE DIARIES Go ahead, and give them a reason too. That OWS would be valid enough. Did it ever occur to you why […]
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@I.M. KRAP
Sorry to learn you are a corporte schill. Everyone around you can easily see how we got to this place. Republicans wars over lies, fact. Unfunded tax breaks for the rich. Fact. Bank deregulation in the name of “small govt.” Fact. Corporate tax breaks for sending jobs overseas. Fact. All Republican initiatives, all facts, and all easy for anyone to see except to frightented.
KRAP, don’t get your political views from FOX which is not really news and is owned by “News CORP”. Did you notice the word CORP prominently in the name? It means they have a biased view point which they are only to glad to slough off on easily misled suckers in the “Patsy Party”. The Patsy Party are middle class people who vote Republican out of fear and an inability to think critically. Thye vote to put corporations in charge in America They support things like Citizens United which uses corporate money for attack ads to swing votes to allow industries to pollute (Current Republican budget proposal wants to defund the EPA and prevent them from taking water and air samples.) and also put their tax burden on the backs of the working people in America.
Dems can’t afford to pay people to blog. They leave it to wealthy Republicans who control the media and if left alone to do their dirty work will rule our Democracy which means it will be no more. Average citizens like me bolg to save America from your type o ffear mongering and lies. Whats next in your comments? Obama is a muslim? Wasn’t born here? Grew up in Kenya? Shouldn’t tell our kids to study? Is from Mars? All conspiracies right? Take of the tin foil hat bone head. If anything Obama is too lienient on Repugnicants. He gives and you back stab.
Go place trouble makers in the crowd somewhere else where idiots will let you do it. Tyr to protect Health Insurance profits on another site or something. Not here, Mr I. M. KRAP. The gig is up loser. Get over it.
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Mikey,
You were told to go and troll elsewhere; be gone before I tell your parents that their pubescent is waving his red diaper for attention and exposing his shortcomings in public.
I.M. Kane
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At least he had parents. You, my friend, emanated from the mixture found on your parents toilet seat.
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You must be a plant by the democrats. Democrats control the media that’s why they all lean towards and favor and praise all of Obamas ideas. The current administration is seizing control of all aspects of our lives. They will take away guns so that Americans can no longer defend themselves. They will take away personal retirements so you are dependent on the government for money. Not to mention health care. I love America but it no longer loves us. The Republicans did some bad things like the Patriot act but don’t try to blame this on Republicans this is all Democrats. Perhaps you just want a hand out. You can go smoke some more crack with my retirement monies that are seized and redistributed then talk on your government provided Obama phone, maybe go to the super market buy a bunch of food with food stamps or a debit card that you were given for turning in your guns or turning in someone that legally owned a gun to protect himself and his family. Now he can no longer do so but will be subject to criminals gun crimes. Criminals don’t care about the law. Taiwan has twice as many gun related deaths as America yet it is illegal to own a gun there. Yeah that works. Go smoke some more crack with my retirement money buddy.
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People who put money into a 401K do put it in before taxes are withheld and understanding that they pay the taxes when they take it out. It is getting something free. No taincome taxes on money earned and out into retirement accounts. Don’t say garbage like Obama, Pelosi and Reid think you got something for free and are going to take it away. If you don’t understnd how 401ks work, study up. Don’t just go off looking ignorant and frightening people to get them to vote for corporate rule in America. Anyone who doesn’t see through the Republican policy of “small govt” as the same as taking away all corporate restrictions and let them rule America and rider free on the backs of everyone else is blind.
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I don’t engage dupes or fools in serious discussions, now go troll someplace else.
I.M. Kane
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Why does it take so long to moderate these comments? Not conservative enough?
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This is not a leftist blog, or haven’t you figured that out yet.
I.M. Kane
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This is just the type of alarmist lies Republicans pay people to post to try and win back the White House and put the economy in the ditch big time. Just like we witnessed the very last time they were in the WH.
Fear is the opiate of Republicans. The post goes totally off the track with the statement “the bankrupt Social Seciurity” system”. SS is fully funded for the next 27 years even at the low rate of contributions seen since Bush and his Republicans collapsed the economy through unfunded borrowing for fake WMD wars., tax breaks for the greedy ultra rich, Wall Street deregulation and big bank bailouts and put millions of middle class workers out of work. After that SS pays at 80%.
Dems want to protect SS. Look at the real record, not the fake one here. Republicans want SS to go to Wall Street bankers who will invest it to lose it to themselves. Simple to do and they have already proved their lack of ethics.
Do not believe any conservative party solutions to the debt. They created it under Bush. Clinton left a $300B+ surplus. It is all fear based BS from the party that undeniably brought you economic failure during every single Republican adminsitration. Look it up. (Not on a FOX corporate owned site BTW)
The post is poorly researched and full of lies. Peroid.
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Mike,
It is obvious that you are bereft of wisdom and lack the intelligence necessary to be a mover or shaker in the movement for world government, so my only question for you is do you have any political beliefs that would set you apart from the well-intentioned “useful idiots” that progressives use to distort the truth and spread misinformation.
I hope they are paying you handsomely to troll blogs that oppose Obama’s dictatorial rule and the Democrat Party’s nanny state; otherwise, you got nothing for your soul.
Now take your collectivist pap back to the Daily Kos and the Huffington Post where it belongs, and leave the reasoned discourse to the people who dare to think for themselves.
I.M. Kane and U.R. A. Dupe
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Idiotic. Silly!
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A brilliant retort! You must have coached your school’s debate team.
I.M. Kane
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Spot on Ken. More fake Republican BS designed to scare the small minded and put Republicans back in the WH and our economy even deeper in the ditch than they did last time. If they get in again with the fragile recovery just taking hold they will destory America. Just look at Republican radicals in WI blaming the econmic problems of the US on union workers making an Avg. of $51K. Hardly enough to get by nowadays. Look to deregualtion of Wall Street, unfunded wars and millionaire tax cuts if you want to find the real Republican deficit creators.
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Silly, You post all kinds of prior posts of places HYPOTHESIZING it. You republicans just throw shit against the wall and see what sticks and then some of you are so dumb and brainwashed that you believe it because – hey, she cited several links!. How silly of you to think this is going to happen, give me a break.
You guys are ruining this country, by the way. Wake up and smell the COFFEE, tea bags! You’re just so DUMB. Theres the results of 2 Bush “Education Presidents” I guess. and you won’t keep this post because you don’t want to know the reality and be exposed as a Bush Sheep, which you no doubt were.
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I thtink that if u find out the facts about tax on private pensions, it started with regan era.I am not 100% sure that is when they started taxing private pensions but I would really like to know.
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[…] got back from the store. Don't let this keep you up tonight folks, just a little light reading… IS OBAMA PLANNING TO SEIZE PRIVATE PENSION PLANS TO FINANCE DEFICIT? THE MILLSTONE DIARIES Of course the whole thing could be a ruse to get folks to cash out their 401Ks so the gubment can […]
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Automatic IRAs just proposed by Obama Administration on 1/25/10 are the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market!
You can review the link to “The Coming Retirement Trap Has Started” posted at http://www.lewrockwell.com/holland/holland12.1.html & your website readers can receive a free PDF copy of the complete 20 page report by mentioning your website in an email Retirement Trap request to ron.holland@bfi-consulting.com
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Great, well-researched post. Thanks.
I shared it at Real Debate Wisconsin.
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