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Is Obama Going To Nationalize 401k Plans?
This proposal is in the 2010 Budget and may be a start of a Government take over of the American 401k and Retirement Account system. Obama is giving retirement, IRA, and 401k savers something to monitor closely….
President Barack Obama is calling for establishing automatic workplace pensions and expanding unemployment insurance as part of his spending plan for the U.S. Labor Department next fiscal year. We liken this to an “Obama 401k Plan”
The budget “lays the groundwork for future establishment of a system of automatic workplace pensions, to operate alongside Social Security, that is expected to dramatically increase” retirement and personal savings, Obama’s Office of Management and Budget said in its outline, without giving details on the costs.
Obama 401k Plan: What it entails
The plan would force employers that don’t offer retirement plans to enroll employees in a “direct-deposit IRA account,” with the option for workers themselves to opt out. Currently, 75 million working Americans, or about half the workforce, lacks employer-based retirement plans, according to the administration.
The troubling thing to me is that the government would pay a 3% fixed interest rate on the accounts as opposed to the diverse mutual fund offerings in a traditional 401k plan. In effect, this would create a “Social Security” type structure to your retirement, IRA, or 401k.
The lack of equity options in your 401k plan would dramatically affect the possible returns, especially over an extended period of time. Just think, the average equity return over the stock market’s history is somewhere between 9-11%. Do you think that you would be happy with 3%?
A traditional 401k Savings Plan vs. an Obama 401k Plan
$10,000 invested over a 30 year period at a 3% interest Rate
Final Savings Balance:$ 24568.42
$10,000 invested over a 30 year period at a 8% rate of return
Final Savings Balance:$ 109357.30
That is a $84,789 Difference!
$10,000 invested over 30 years with an annual contribution of $2,000 at 3%
Final Savings Balance:$ 121302.74
$10,000 invested over 30 years with an annual contribution of $2,000 at 8%
Final Savings Balance:$ 356756.97
That is a $235,454 Difference!
As you can see. Your 401k plan offers you a drastically higher return than Obama would give you at 3%. The nationalization of the nations retirement system could cost you a pretty penny.
Is an Obama 401k Plan what you want?
The proposal “raises more questions than it answers,” said Representative Howard “Buck” McKeon of California, the top Republican on the House Education and Labor Committee.
“We need to take a step back and question this ever- expanding role for the federal government,” he said in a statement.
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I really don’t understand your comment in the article. The proposal would require employers which don’t offer retirement plans to now start offering retirement plans. Hence it would offer 75 million people access to a pre-tax savings account…which people can opt out of if they want. It says nothing about sunsetting 401Ks or having them replaced or “nationalized” as you suggest. How about covering the view in a more balanced way?…how much retirement a person currently without access to such a plan could benefit? Your article is a “Rush Limbaugh” like propaganda where conclusions have no basis in facts…but created fiction. We are in the deepest r(d)ecession in our lifetime, and all you can offer is status quo? Please….
why do you hold such a strong opinion about something you dont know what to call. does decession make sence? i dont want to embarrass you over the internet, wow, so i’ll cease.
1) Those 75 million peoples already have access to a pre-tax account. It is called an IRA.
2) The difference is that having the account would be the default action. We all know how ‘lazy’ people are in such decisions, so this might not be totally bad in theory but it is still an intrusion.
3) The biggest problem with such a plan is that “the gov’t” will be paying the 3% return. Where will the gov’t get this? What will the gov’t do with “our” funds for 30 years? Will the gov’t even “have” to leave our money alone or will they simply “loan” it to themselves and leave us IOU’s ala social security? What happens to the overall economy if these automaticly deducted funds are not injected into the private economy but only the gov’t economy?
u are right on track. i would rather take mine out early and take a hit than give it to theifs.
401(k) plans aren’t even a good investment NOW unless there is an employer match, how is a plan that pays about the same as the cost-of-living even a good idea?
Folks already have the option to open an IRA and fund it with pre-tax dollars, so why do you think this would actually be helpful? Easier just to up the limit for pre-tax contributions on people that don’t have employer plans instead of mandating businesses deal with.
Much better idea, anyway, to pay the taxes now instead of on the gains later, unless you’re planning on being poor when you retire.
The problem is that the gov already created a retirement savings account (Soc Sec) and they squandered it and gave it a way to people who did not contribute. Soc Sec became just another tax with little correlation between what you paid in and what you got out.
Secondly the gov WILL spend this money as soon as they get it will cut off all options for you to withdrawal before full retirement age. They will take your money and subsidize AFGA SEUI and all the state pension funds that mis managed their money.
Obama will take your hard earned money and subsidize his ever growing government workforce which he sees as votes bought and paid to propagate the gravy train.
If I can have my 401K invested individually at 7% or 8% or more, why would I want 3% regardless it’s a monkey or a snake’s plan.
Thanks Mike Rowan, you have pointed out very clearly with numbers, unless one is number blind, it’s not hard to see the vast difference.
Hi I dont’t invest in 401k and don’t want be forced in to investing in goverment 401k plan. I like my money in in gold and silver. If you do the history over the stock market to gold or the dollar to gold you will see what I mean. And my co-worker say well it goes up and down to. But when the market goes down they cry when gold goes down I get it cheaper and I never can lose what I have already got and no one can take it from me. the whole key is gold doesn’t go up or down it is the economy and price of are dollar. thanks Hamilton
Actually, historically, gold pretty much just keeps up with the cost of living. Yes, there are highs and lows, but those are just on paper — just like stocks, unless you sell during a “high”, you haven’t gained a thing. Once the economy balances out, gold will too.
To those that aren’t too familiar with what’s being discussed,this will simplify the concept;The government is desperate for revenue,there’s a buttload of money in 401K’s,they are now trying to gain access to it.
The government will justify this theft by claiming that “they will take care of you and protect you,just give us more of your money”.
Very few people will be foolish enough to buy this,it will then probably lead to an avalanche of people cashing out and acquiring real assets(gold).
I smelled these problems three and a half years ago,I’m now up 95% in physical gold and sleep like a baby.
Why can’t Obama just get it through his head that we don’t want his protection. Most of us like the pace we are going.
I have a Roth IRA. Why would I want a government 401k? And I bet if you don’t opt into the government 401k plan you will get penalized or your current retirement plan will be taxed even higher since those who know how to manage money will not opt into a government option.
Also I am not rich, I make less than 24K a year in CA, and I still invest as much as I can. I’m doing better than most because I listened to my high-school econ teacher who said, “start your retirement plan now.”
We said this was going to happen BEFORE the election, too bad all America could hear was “Hopey/Changey.”
How’s that working out for y’all?
Sounds to me like a way to “supplement” the Social Security funds that are going broke. As an added bonus, your 401G (government) account wouldn’t adjust for inflation, either.
The reason he wants to takeover retirement plans it to access the 3 trillion dollars for his programs. No country wants to finance our horrendous debt anymore and Obama plans to add more. The logical place to get it, is our pensions and 401ks. You won’t have a choice but you will get a whopping 3% return on your ‘investment’.
South America is looking better and better.
The more the Fed gov’t turns into the socialist big brother, the more desperate it will become to consume any and all assets. The retirement accounts are the last phase. First they’ll get the new contributions, then they’ll fix their eyes on the vast assets tucked away from prior deposits. Once they have entirely bankrupted the country and destroyed the resources that the people need to fight back, then it will be time to toss off the constitution and confiscate what’s left. This is their plan, will you let them do it? Hopefully we’ll still have a chance to vote in Nov!!
The Obama administration has already shreaded The Constitution. One example is when Obama made back room deals with certain state senators in order to get their vote for his health care bill. The deal that Obama made with Ben Nelson of Nebraska – permanently exempting the state from their share of share of Medicaid expansion which means the federal taxpayers pick up the tab for Nebraska – violates Article 1 Section 8: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, …but all Duties, Imposts and Excises shall be uniform throughout the United States”. Socialism is already here and it’s like a snowball going downhill. If there’s any chance of stopping this madness, everyone needs to get involved and educate your family, friends and neighbors about what is going on! It is unbelievable the number of people who do not pay attention and have no clue as to what is going on. I guess they will wake up one day in Russia and wonder how they got there!!
Wake up people. They shoved this health care bill down our throats when the majority of Americans did not want it. Do you think that you will actually have a CHOICE as to whether or not the government takes over your retirement funds that you have been so disciplined to save all these years? Face the fact that this is not America anymore after only one year of Obama. Obama needs all the money he can get in order to finance his agenda. I know several people who have a million dollars in their 401ks so I can only imagine the govt is salivating at the thought of the total amount they could add to their coffers by taking advantage of this money grab opportunity. When Obama campaigned on “Change”, what he meant was that change will be all you’ll have left in your pocket when he gets through with you.
I may sound ignorant to the fact of what is going on with 401ks and Obama.
My question: Is the Government taking our 401ks, IRA, 435B, etc a reality in the next year?
What are we supposed to do – we have been good stewards of saving and don’t want it take away or handled by another entity (we don’t approve or want)…
Someone, please answer.
As far as I know, this is not a done deal. You have time to email, phone or visit your state and federal elected officials and let them know you don’t agree with this and tell them you hope they don’t have intentions of voting for any such legislation. Inform everyone you know and have them do the same. People need to stand up before we have lost everything we’ve worked for.
I bet the liberals are hoping that the PARTY of NO sticks to its guns on the nationalization of the 401k’s and I welcome you to join conservatives in the dissent to BIG Government intrusions.
Remember, a government big enough to give you everything you want is big enough to take it all away as well as everything you have.
They alredy get 12% for social security. Now they want another mandatory 10% so they can “invest it” for me, ie pay the interest on our national debt. Somehow creating a new federal agency with 100K over paid employees will magically create more wealth than investing in the businesses that make the things I use everyday?
Please tell me where my 401k can earn 8% each year over 30 years.
If even a hint of this being serious gets out then the 401k plans will disappear in a puff of smoke, penalty notwithstanding. You think the bank runs we saw in 2008 were bad? Just wait ’til the 401k folks start looking for the exits.
I’d like to know if this is current legislation being proposed? If so does anyone know what the number of the legislation is?
I for one am fed up with our federal government beyond any ability for description. More and more and more money for wasteful centralized government programs (waste).
I for one cannot imaging handing over the management of my 401K monies to the same people who squandered the trillions of Soc Sec monies that have been collected from the American people.
Well its almost 2011 and these rumors of new government controlled retirement plans are still circulating on the Internet. For years!!! This was all started by a Professor Ghilarducci speaking at a hearing in Washington. It didn’t gain support from anybody including the Dem’s. It was a hearing nothing more. They discussed a lot of topics at the hearing. There is no action being taken. You uninformed people are being manipulated by this political scare tactic. There is nothing recorded in the congressional record, no senators are on record proposing this. President Obama is not proposing this. You people are entitled to your opinions but not entitled to your own facts. There are no facts to support this other then the suggestions of a Professor Ghilarducci.
This is our money not his to do what he wants. It’s what we worked for for so many years. No one should touch our money nor it should be use to fund his medical plan or for people who do not work that sit at home daily collecting a Welfare and or Social Security check when they have not paid a penney into the system.
4 or 5 European countries have started to take pension plans – France, Hungary, Ireland, etc. Some are private pension plans ( funds owned by an individual) but seem to be under government control. No stocks, mutual funds , etc. The danger is that we have a government that would love to be involved with a global governance, that needs cash desparately, and would not stop to reach it’s objective. How would be done, I don’t know? Executive Order?
More Talk On Nationalizing 401(k)s and I.R.A.s
This site looks pretty legitimate to me. I wouldn’t be so quick to dismiss this idea as not having any substance. This country has changed radically in the last year. I think we all need to be better informed and aware of what is going on. The latest tactic is to enforce these types of changes via regulation, which can occur without congressional approval, just like the end of life counseling that was recently implemented as part of preventative care by the Obama Administration. If they can’t get it passed legally, then they will just find some other way to do what they want.
Look, we are in a lot of debt, and we have to beg the Chinese to buy our loans. What do you think will happen when no one wants to fund our loans anymore? The government has been reckless with its budget and the time of reckoning is near. If we don’t get our spending under control it will devastate our dollar, and our standard of living will greatly suffer. No reality, huh, you better think twice before dismissing this. Oh, yes and gold is a good investment because when the dolor loses over 50% of its value your gold should remain fairly stable, but in the end it will be about the necessities. I recommend you think about how you will support yourselves when you debt is the same, but the buying power of your discretionary income goes to zero. The prudent see the storm coming, make preparations, and survive. The foolish ignore the signs and suffer. Now is a good time to get yourself financially stable, and protecting our 401 K or even cashing it out to pay your debt might not be a bad idea.
All I am saying is watch the signs, stay informed, voice your opinion, and be prepared to take care of yourself.
can i get a Hallelujah. Amen brother.
I would hope that most members of Congress see this as what it is a quick trip for them to the unemployment line as I doubt that most Americans feel that we need to be “taken care of” by a socialist style government. After all they work for us not the other way around.
Dave is there a website you can recommend so I can start the process of cash out my 401k?
The Government already took all of Social Securities which is out right theft of multi millions of baby boomers are coming after them for this abomination. I will not trust them one bit with another retirement to be put in their trust hell no way nada zero zip ! Washington all should be arrested for stealing what was not theirs to take at all !
If you do not contribute to Social Security,then you can not receive the benefits of it.Look up SocialSecurity.gov if you don’t believe this.
It is now called “The United Socialist States of America”.
The government can take what they want when them want.All we can do is try to slow them down.If you think they can’t take your gold or silver,you’d better think again.Remember what they did in 1933?I didn’t think so.
I remember. I want to know what good it is to invest in gold if you dont have it in your hands. Do you think the investment companys will send it to you in the mail when everything does go under? Or will they keep it for themselves?
There is a MUCH LARGER PICTURE. Nationalizing 401k plans means this, they take your 401k money, and everyone elses, put it in an account. Then the govt tells you how much money YOU GET…it does not matter how much you 401k was worth, they decide your income like Social Security does. This will give your money to the people that have not worked like you did for 35 years their “entitlements” cause SS will not be available in 18 years. So, the plan is to take all 401k, etc and use that for SS. This is BS.
Are you people serious? Do you actually believe the Government would confiscate our 401k plans? Good lord – what rock do y’all live under?