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30% Of People With A 401(k) Have Taken Out A Loan Against It: New All Time Record

Tyler Durden's picture





 

About a year ago Zero Hedge posted an article titled: "Record Number Of Americans Using Retirement Funds As Source Of Immediate Cash" after a report by Fidelity uncovered that "plan participants with loans outstanding against their 401(k) accounts had reached 22 percent versus 20 percent a year earlier." It is now time to revisit this very important topic because if recent press reports are true, last year's record number has just increased by another 50%. "On "The Early Show" Thursday, financial journalist and Newsweek
columnist Joanne Lipman said, "Right now we have 30 percent of people
who have 401(k)s have loans against their 401(k)s, which is a historic
high. And the problem is, it's growing like crazy: By 2014, we're
expecting to see 30 million people take loans against their 401(k)s
." The raiding of the last ditch piggybank is on, and who can blame them? With banks setting the example of always reverting to the Discount Window (or the Excess Reserve stash as is now trendy) when in trouble, ordinary working Americans are merely following in the footsteps of their financially more "literate" betters. Unfortunately, unlike the "depositor" institutions, nobody will replenish these funds should they not be repaid and the retirement money is gone for good.

CBS News explains why raiding your 401(k) is so easy a caveman can do it:

Sheri Chaney Jones, of Columbus, Ohio, started a consulting business in October and borrowed from her 401(k) to help pay her bills.

"It was extremely easy,' she told CBS News, adding that her financial planner told her "she was seeing more and more people" do it, "because the banks were not giving loans out traditionally to small businesses anymore."

"It's not right for everyone," Jones noted, " but it is your money, you can borrow from it tax-free, you do pay yourself back at interest, but a very low interest, much lower than maybe a traditional bank."

Just like Wall Street sellside research, delusions are rampant:

"What I feel optimistic about," Jones says, "is that I will be able to grow this business to not only pay myself back at the current interest, but continue to contribute more toward the 401K than I would have if I would have stayed where I was."

And for those wondering why doing a 401(k) raid is the worst possible idea:

"It's a big, big problem," she remarked to co-anchor Chris Wragge, "and it's one that's really been under the radar. And the big problem is that, if you lose your job, you have to pay that loan back within 60 days. So suddenly, you have no income, you owe all this money back, and the fact is that most people are unable to pay it back.

"There was a survey recently that found that 70 percent of people who lose their jobs are unable to pay back the loan and go into default. And the number is even higher ... for young people -- it's closer to 80 percent."

It gets worse: "If you go into default," Lipman pointed out, "you've just raided as a piggybank your 401(k), you don't have retirement funds and you owe taxes and penalties."

Step aside HELOCs, here comes the pension money for iPad exchange:

Still says Lipman, "There are certain times when it makes sense. If you're secure in your job, if there is a one-time expense -- let's say you need money for a down payment on a home, that's fine. You know, that makes sense. Or for education, for medical expenses. You know, that can make a lot of sense. Because you are paying yourself back. And if you can stay on track, you're fine with that.

"But the problem is, when you use it as a piggybank. When people are using this to pay for a vacation, to pay for a home that's perhaps larger than they can afford - that's where we really get into trouble."

Luckily, Americans have demonstrated beyond a reasonable doubt that when it comes to abusing rainy day capital to satisfy trivial material needs, there is nothing to worry about. Nothing at all.

 


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Thu, 06/09/2011 - 18:45 | Link to Comment Fancy Bear
Fancy Bear's picture

Oh my god.

Thu, 06/09/2011 - 18:52 | Link to Comment camaro68ss
camaro68ss's picture

is this going to be like when people took equity out of there houses in 08. can you forclose on a 401k after the next crash. lol

Thu, 06/09/2011 - 19:28 | Link to Comment CrazyCooter
CrazyCooter's picture

401k's are "poor mans leverage" ... I did take out a loan last fall (max of 50%) ... and bought silver.

True story.

Another guy at work was planning to do the same thing, however I changed jobs in Jan to GTFO of a major metro area, so not sure if he followed through.

WTF difference does it make? Does anyone in these forums genuinely think that in 20 years or 30 years that the "401k dollars" will be worth a piss?

The logic here is "part of something is better than all of nothing" and nothing is what it will be worth come retirement.

Regards,

Cooter

Thu, 06/09/2011 - 19:47 | Link to Comment Prometheus418
Prometheus418's picture

Yep.  Though in my case, I took the loan and used it for seed capital for a stockpile of food.  With three gradeschoolers to feed, it seemed more important than silver.

Then reduced the contribution rate to 0%, and have been using that money to buy silver instead.  Tried to close it out entirely, but they won't allow it.

Also bought a mini silver-mine.  Don't know if it will work, but I bought and am supplying the town parks with pop machines- decent return for a low investment, and there's always an outside chance that someone will unknowingly drop a few silver coins in.  

Thu, 06/09/2011 - 20:14 | Link to Comment Thomas
Thomas's picture

They have credit cards that link to retirement accounts to use them as lines of credit. I sent that off to a big-gun at Bloomberg and he said, "There is a special place in hell for whoever came up with that." Same email went out to Elizabeth Warren: She was simply "breathless".

Thu, 06/09/2011 - 22:54 | Link to Comment Freddie
Freddie's picture

Hope & Change.

Fri, 06/10/2011 - 02:58 | Link to Comment Michael
Michael's picture

The 401K program was designed to relieve old school corporations from giving their employees fully paid pension benefits.

It worked like a charm.

Fri, 06/10/2011 - 08:26 | Link to Comment Nels
Nels's picture

Actually, it did work like a charm (without your sarcasm).  My 401K is going to provide more than my pension.  The 401K match might have been less than what went into the pension, but it wasn't free for the company.  I'd have been a lot happier if I could have had the pension contributions also put into the 401K.

When I retire, the company is off the hook for 401K expense, and I am free from them.  While I was working for the company, they were free to change my pension plan, and they did, to my loss.  But a buck into the 401K was a buck they no longer controlled.

Thu, 06/09/2011 - 21:00 | Link to Comment uno
uno's picture

I just took out a max loan 2 weeks ago, will buy silver sometime this year, I'm waiting for a pullback.  I'll keep maxing it out as often as possible to get physical.

Fri, 06/10/2011 - 05:03 | Link to Comment jeff montanye
jeff montanye's picture

49 to 37 is a pullback.

Thu, 06/09/2011 - 21:04 | Link to Comment SYantiss
SYantiss's picture

I did the exact same thing...

I kept enough liquid to make payments for a year if silver tanked...

The 401K will be the first thing the government steals from... After the federal retirement accounts...

Thu, 06/09/2011 - 21:27 | Link to Comment Libertarians fo...
Libertarians for Prosperity's picture

Me, 2.

But instead of borrowing against my 401K (I was told there were penalties and taxes to pay), i borrowed against my house. It was free/clear, so I took out a 250K HELOC at 4.5% this past April and bought a shit-ton of silver. 

Best decision I ever made.   

Thu, 06/09/2011 - 23:30 | Link to Comment Misstrial
Misstrial's picture

What I did after I lost my job at the end of 2008 was to convert the 401k to a T Rowe Price IRA and bought gold Eagles which I then rolled over into a TRP Roth. Symbol to hold gold coins in T Rowe Price is GC-1. Vaulted in Delaware.

Best move I ever made. Some days during the ramp-up in '09 and '10, I was making $700 a day on asset appreciation. Still have my coins.

401k plans have lousy investment choices with no physical pm funds such as Sprott.

~Misstrial

Fri, 06/10/2011 - 02:01 | Link to Comment FreedomGuy
FreedomGuy's picture

I was in similar boat. I've been laid off twice in the past two years. Had to close one because of a loan and cashed out another and bought silver. Good move.

What pisses me off is the government commits identity theft and puts loans against us to save bankers and stupid financiers...keeps them wealthy but taxes the living hell out of the small guy who tries to get HIS OWN MONEY (not other peoples') out of his retirement. I really hate the penalty in particular. It reinforces we are NOT free. We cannot do anything with our own earnings without government permission or conversely, government can manage our money any way it pleases. Therefore, it is not really ours.

I talked to my HR dept. about our choice of funds and pointed out that there was not one single fund that protected against inflation and we didn't even have a cash reserve fund. I suggested that that made them liable for losses in an inflationary crash. They didn't like that but gave me some mumbo jumbo about working on that. I suggested we just get a self directed account like a Fidelity or others and be allowed to invest in anything we please.

I have decided that with so many rules and conditions, 401k's suck. Plus, I now believe taxes may well be much higher in the future.

Fri, 06/10/2011 - 00:46 | Link to Comment malek
malek's picture

Just explain to us err-on-the-side-of-safety guys looking in disbelief:

Why didn't you go full frontal and take out the 401k, pay the penalty and taxes, and have it off your back?

Fri, 06/10/2011 - 10:01 | Link to Comment Badabing
Badabing's picture

You can’t win with 401k’s, the money comes out of your gross pay or before taxes.

With this money, you are allowed to gamble on a limited range of investments. To keep up with inflation you need to be in high to medium risk. Money markets are safe but do not yield enough to offset inflation. Now all the “free” market has to do is pump and dump and it’s gone. Hold it until retirement and you’re in a lower tax bracket with money that has much less purchasing power. If you borrow against your 401k you pay interest on the loan and have to pay it back with MONEY AFTER TAXES that goes back into your 401k to be taxed again. Can you say double taxation? If your employer contributes it is worth it to let it accumulate until you leave your job than cash out pay the tax and penalty and buy PM’s. I did at the lows of 2009 and broke even @ $1300 oz. My wife called me a jidrool but now she has to blow me.

Thu, 06/09/2011 - 19:38 | Link to Comment dark pools of soros
dark pools of soros's picture

nah as long as it goes to real items or pay off higher debt it is the best thing to do.. sure if you lose your job you have to pay it back right away but if you lose you job you can take out the whole thing and that fixes the difference...

 

I paid off high debt with mine and I am thinking of paying it off, waiting the 6 months, and then take out half the value in a loan which I think is the max.. then just buy gold and some more silver

 

 

Thu, 06/09/2011 - 18:57 | Link to Comment I think I need ...
I think I need to buy a gun's picture

i took one out to by more gold....you know they charge interest to have the loan against your own money.....i'm just sorry i can't get the rest and put it in physical.....they have u trapped i would have to quit

Thu, 06/09/2011 - 19:13 | Link to Comment FaithEqualsZero
FaithEqualsZero's picture

Same thing on my end. Took max loans on both sides. Dumped into PM's near the trough of '08. I would close out my account but they won't let me so long as I work there. A 401K is a GovCo program. THIS is how they will steal the money. They think it is theirs already.

http://www.law.cornell.edu/uscode/26/usc_sec_26_00000401----000-.html

Thu, 06/09/2011 - 21:15 | Link to Comment max2205
max2205's picture

Don't worry no one ever loses their j.o.b.

Thu, 06/09/2011 - 21:51 | Link to Comment HungrySeagull
HungrySeagull's picture

Let me get this straight. Uncle Sam empties the money from retirement to fund current day to day operations while Congress dickers over the budget and debt.

The People withdraw the money from the accounts and penalties be damned because no one has the income to pay any of it at all.

And the banks, employers and other things like Unions will find themselves required to fill the gap when all these borrowers do retire. Or are retiring.

 

Oh my God indeed.

Thu, 06/09/2011 - 21:54 | Link to Comment Frankie Carbone
Frankie Carbone's picture

I maxed out my 401K loans and have bought gold with it. 

Smart as hell move. My returns have smoked the limited options in my 401K. 

Thu, 06/09/2011 - 18:51 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

WTF is a 401K? Is that something they gave geezers before the McEconomy?

Thu, 06/09/2011 - 19:18 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Exactly... Like pensions and job security they're all lost vestiges of the past wealth USA used to have.

Remember when there used to be men on the moon and super sonic planes? Ah the good old days.

Thu, 06/09/2011 - 19:26 | Link to Comment dwdollar
dwdollar's picture

Yep.  And I don't feel sorry for these old f******.

Thu, 06/09/2011 - 20:36 | Link to Comment Arnolds Love Child
Arnolds Love Child's picture

Yes. And it was made of paper.

Thu, 06/09/2011 - 22:27 | Link to Comment Libertarians fo...
Libertarians for Prosperity's picture

WTF is a 401K?

Good question.

A 401k is a special sort of retirement account.  A portion of your monthly income goes into this account (tax free, at the time) and sometimes your employer will match it - to a limit.

If you have any additional questions about it, just google it.  you'll find stuff about it everywhere.

 

 

Thu, 06/09/2011 - 23:58 | Link to Comment Tejano
Tejano's picture

Since you ask, 401Ks - I take it they are not available to poor little McSlaves, otherwise you wouldn't have to ask - can be made to work well. Instant 25% + return (if you're makin' six figures) because contributions (up to 20k per anum) are 'before tax deductions'. If you've chosen the right employer, they'll kick in several thousand dollars a year on top of that - again "tax free". And, with the right employer, you can make 'in service withdrawals' once you've attained the age of 59.5 years (you probably won't live that long) and periodically roll those funds right over into an IRA (look it up, and while you're at it look up Happy State Bank). Of course that's after you've taken out the max loan (you 'pay' any interest to yourself) and bought bullion to bury out by the pool.  Sure, 401Ks and IRAs might be confiscated and redeemed for .gov debt, but by then... However, if your skills are such that you are a participant in what you call the "McEconomy", you won't be doing any of that. So, have a nice life on the rez.

Fri, 06/10/2011 - 00:47 | Link to Comment malek
malek's picture

Yes, and the gov't will never, NEVER raise the taxes you will have to pay when you take out your 401k money after retirement. So you are perfectly safe and should never even consider saving any retirement money outside a 401k.

/sarcasm   (for the newbies here)

Thu, 06/09/2011 - 18:49 | Link to Comment silvertrain
Thu, 06/09/2011 - 18:50 | Link to Comment vocational tainee
vocational tainee's picture

So what, if the fed is going on like it does,the dollar is bust..

Fri, 06/10/2011 - 00:06 | Link to Comment Tejano
Tejano's picture

From the article you cite, "Laws like this don't defend Americans -- they infantilize them."  Infant.

Fri, 06/10/2011 - 00:06 | Link to Comment Tejano
Tejano's picture

From the article you cite, "Laws like this don't defend Americans -- they infantilize them."  Infant.

Thu, 06/09/2011 - 18:49 | Link to Comment Conrad Murray
Conrad Murray's picture

Parents borrowing against their retirement to survive day to day, while their kids borrow against their future to do the same, in the form of student loans. Debt slaves all.

Fri, 06/10/2011 - 04:47 | Link to Comment Incubus
Incubus's picture

I'm waiting for the debtor's prisons to make a comeback. 

They'll have to wall off america and make it one big prison system: a perfect debt-prisoner population with no choice but to exist in debt--for life.

Thu, 06/09/2011 - 18:55 | Link to Comment Fukushima Sam
Fukushima Sam's picture

If you have to pay back the loan right away because you lost your job then you can just take the whole thing out instead and take the tax hit and put the remainder into gold.

Thu, 06/09/2011 - 19:40 | Link to Comment dark pools of soros
dark pools of soros's picture

exactly.. since most get 100% matching who cares about the tax hit.. just play it in your favor as long as the rules still let some gaming done

Fri, 06/10/2011 - 00:22 | Link to Comment Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I can't WAIT for the fedgov leechfucks to start seizing or taxing 401ks, it'll be the perfect time to take the money and run.  All the matches from my last employer have vested, I just don't have anyplace in particular to put it yet and I'm lazy.  But once I see actual legislation on the floor Imma gon' pull dat shit fuck the penalty.

Fri, 06/10/2011 - 01:55 | Link to Comment HungrySeagull
HungrySeagull's picture

My spouse was vested until one evening the previous spring the administration in the executive board released a handbook stating that all 100% vested as of May 1st post midnight is reduced to 20% vested with 6 total years being required to regain 100% vest. And in addition 5000 dollars was the max payout, rollover or any disbirsement. Anything over 5K is automatic annuity starting at 62 years of age.

No one in that 2000 workforce employer had a clue until the 8 am shift when they were all handed the book. I knew at that moment we were Fucked. So we slashed earth and scorched it and cashed it out.

 

That formed the core of our Physical Silver Holdings; something we will not sell for a very long time or until a certain price target is met, whichever is first.

Thu, 06/09/2011 - 18:54 | Link to Comment fbrothers
fbrothers's picture

That is why we need to regulate the lenders. People are stupid.

Thu, 06/09/2011 - 20:31 | Link to Comment Michael Victory
Michael Victory's picture

The lenders already made their loot.

On the backs of The Happy Borrower.

 

Thu, 06/09/2011 - 18:51 | Link to Comment razorthin
razorthin's picture

Yup. In my plan, the net apr is 3%, it's off the record of credit reporting reporting agencies, and if you default, it is just a distribution.  If you are in a rock and a hard place, you can declare hardship to avert the 20% federal penalty.

Thu, 06/09/2011 - 22:20 | Link to Comment Dr. No
Dr. No's picture

Thank you! That is brilliant! As credit ratings go down and interest rates go up, seems like a great way to do a car loan or something. I have not contributed to my 401k, even with the company match, since i dont like my money in lock down. However, this seems like a real alternative.

Thu, 06/09/2011 - 23:33 | Link to Comment Mitch Comestein
Mitch Comestein's picture

BTW, it is a 10% penalty plus the distribution gets added to taxable income.

Thu, 06/09/2011 - 18:57 | Link to Comment emsolý
emsolý's picture

This is transitory at best. Imagine how much these 401k assets will have appreciated after one, two more Recovery Summers. Especially in light of the fact that debt doesn't matter.

Thu, 06/09/2011 - 18:53 | Link to Comment barliman
barliman's picture

 

That 30% number seems low ... was it run through the TEPCO adjustment app?

oh well, it will go up

 

barliman

Thu, 06/09/2011 - 18:57 | Link to Comment Rainman
Rainman's picture

Sentenced to life in debtor's prison, the inmates will always be creative. And the warden thinks they're supposed to give a shit and pay taxes and penalties. Fuggitabout it.

Thu, 06/09/2011 - 19:16 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Build more prisons to hold them single moms who can't pay the mortgage or credit cards. Thatll show them to be poor and useless.

Thu, 06/09/2011 - 19:52 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Don't forget all the college loan defaulters.

Fri, 06/10/2011 - 01:56 | Link to Comment HungrySeagull
HungrySeagull's picture

We are doing ok with our loans. However we feel no duty or obligation to maintain such if the United States Defaults.

Fri, 06/10/2011 - 01:53 | Link to Comment HungrySeagull
HungrySeagull's picture

Sorry for the double post.

Thu, 06/09/2011 - 23:18 | Link to Comment ThirdCoastSurfer
ThirdCoastSurfer's picture

Free health and dental care in federal prison, just be sure to get a private room. 

Thu, 06/09/2011 - 18:59 | Link to Comment Pepe
Pepe's picture

Is not this the greatest country in the world? God bless America

Thu, 06/09/2011 - 18:59 | Link to Comment cossack55
cossack55's picture

Good luck on having a 401 after the Treas runs thru the Fed Retirement bucks. 401s and IRAs next on the menu. But you'll like that Govt Annuity.

Thu, 06/09/2011 - 19:00 | Link to Comment Hugh_Jorgan
Hugh_Jorgan's picture

Pay 5% on the loan, double you money by buying PMs with the cash! 401K was earning squat anyway!

Thu, 06/09/2011 - 19:01 | Link to Comment RobotTrader
RobotTrader's picture

90% are probably coin-clutching anarchists who:

1) Borrowed against their retirement accounts

2) Used such proceeds to buy gold and silver coins

Hoping that one day the "$1,650 and beyond, then to Alf's , E.T.'s, Armstrong's, and Buzz Lightyear's $12,500 target" will be reached which will allow them to:

1) Cash out most of their PM hoard with ease and minimal taxes

2) Retire to a private island

3) Live with multiple massage girls and escorts of every stripe, race, and color

4) Guffaw at all the Wall St. PigMen sent to prison

5) Wait for fractional reserve lending to be abolished, a complete and total collapse of the "Ponzi Economy" with 98% of all proles not fully invested in PM's wiped out, and an eventual return to a specie-backed currency.

................

Hey, wait a minute....

What are the odds of that happening????

Oh, sorry, I was only dreaming.....LOL

 

Thu, 06/09/2011 - 19:13 | Link to Comment EscapeKey
EscapeKey's picture

That's an impressive amount of stupid right there. Congratulations.

Anyway, impressive that you see a positive side of people being so desperate, they cash out their retirement funds. I hope you don't expect any empathy if you ever fall on hard times.

Thu, 06/09/2011 - 19:09 | Link to Comment Rainman
Rainman's picture

....except for the part about Pigmen being sent to prison. On second thought that's stupid too.

Thu, 06/09/2011 - 20:40 | Link to Comment Arnolds Love Child
Arnolds Love Child's picture

breathtaking

Thu, 06/09/2011 - 19:04 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

get off my cloud will ya?

Thu, 06/09/2011 - 19:06 | Link to Comment razorthin
razorthin's picture

Actually, the next failed move to the upside (preferably QE3-induced) would be a good time to borrow against it to short the shit out of the market - even worth the fiatscos.

Thu, 06/09/2011 - 19:04 | Link to Comment EscapeKey
EscapeKey's picture

Only if you don't expect QE3 will arrive. Which it will, in one form or another.

Thu, 06/09/2011 - 19:06 | Link to Comment razorthin
razorthin's picture

No, I said that is preferable.  I want a higher short entry.

Thu, 06/09/2011 - 19:24 | Link to Comment Greeny
Greeny's picture

Did anyone of you though about inflating

somebody else money?

If you so sure, that Inflation will get out of hand

then it could be a bullet proof Idea to lean some property

(FIXED Low interest % 3o years home equity loan) buy Gold and

inflate FEDS

money.. See what I mean? If you guys so sure that GOLD will

go up and inflation will erode the value of the USD, then

What the heck, there will be no better time. I thought about it

few years ago, but at that time I have enough capital without

taking any loans.. But instead of bitching on FED printing

it's really easy to Short FED by inflating their money.. ;)

Could GOLD do at least better than 5%/year in fiat terms

you are the winner.

Thu, 06/09/2011 - 19:03 | Link to Comment hamurobby
hamurobby's picture

Hahaha, could you imagine if all that money poured into pm's, I would have to stop buying.

Thu, 06/09/2011 - 20:29 | Link to Comment Crab Cake
Crab Cake's picture

Hey Robo.

Your as much of the problem as Goldman, the Fed, or the political parties.

When and if the time comes people like me will appropriate your wealth so that our families can survive. Fuck you, and fuck the way you earn your living; you are a traitor not a trader. Avoid lamposts and rope buddy, just a suggestion.

PS I'm glad to hear people are taking their money out before the criminal federal government can get its hands on it.

Thu, 06/09/2011 - 22:51 | Link to Comment Mr. Mandelbrot
Mr. Mandelbrot's picture

I liked you better when you kept your mouth shut and only posted stupid charts and chic pics . . .

Fri, 06/10/2011 - 01:10 | Link to Comment bigwavedave
bigwavedave's picture

Rapturous 

Fri, 06/10/2011 - 10:31 | Link to Comment DrunkenMonkey
DrunkenMonkey's picture

Check out the balls on this guy :)

Thu, 06/09/2011 - 19:01 | Link to Comment Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

What could possibly go wrong?  Retirement account prices can only go up.

Thu, 06/09/2011 - 19:01 | Link to Comment PulauHantu29
PulauHantu29's picture

Ya mean I can't saunter up to the Fed Window next to Blankfein and Jamie Diamond and get reimbursed for my losses?

Thu, 06/09/2011 - 18:58 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Burn victims will produce green sprouts.

Burn, baby, burn.

Thu, 06/09/2011 - 18:59 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

In some plans it's the only way to invest outside crappy mutual funds & bond funds.

You have to be active in the 401k and employed. You pay yourself a variable rate, which is a small increment above some index rate via payroll deductions.

Looks like a good deal for the little guy who is currently employed -- which is why the banksters will lobby it away.

Thu, 06/09/2011 - 19:00 | Link to Comment Shameful
Shameful's picture

Good.  Better the people get to spend it on God knows what before Uncle Sugar lays a paw on it.  Will be quite the comedy when Uncle Sugar demands the loans be repaid immediately because it wants all that cash.  Got to keep the ponzi going no matter the absurdity.

Thu, 06/09/2011 - 19:02 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

pay on demand if you terminate employment with the sponsor of the 401k plan. Or you don't pay back and take the penalty.

Thu, 06/09/2011 - 19:40 | Link to Comment Shameful
Shameful's picture

No I'm talking Uncle Sugar takes the plans for gov annuities, then to twist the knife calls in all outstanding loans.  Not the move to make people happy since it's the equivalent to cutting on someone with a rusty knife and then pissing on the wound, but hey never know how crazy Uncle Sugar will be when he is getting his loot on.

Thu, 06/09/2011 - 19:03 | Link to Comment EscapeKey
EscapeKey's picture

If they need more slave labourers for Corrections Corp, they'll find a way to send people to debtors prison for this.

Thu, 06/09/2011 - 22:14 | Link to Comment scatterbrains
scatterbrains's picture

perhaps the Gov. will sell the indebted to collection agencies that will pay pennies on the dollar for peoples souls, putting them to work as laborer/slaves.. like a temp agency brokering slave labor.

Thu, 06/09/2011 - 19:01 | Link to Comment hamurobby
hamurobby's picture

Yawn. Keeping up appearances, get real America.

Thu, 06/09/2011 - 19:05 | Link to Comment Michael Victory
Michael Victory's picture

live for today, the american way.

Thu, 06/09/2011 - 19:07 | Link to Comment monopoly
monopoly's picture

Is there any end to all this. On and on and on. I don't think my cave is deep enough. So sad.

Thu, 06/09/2011 - 19:09 | Link to Comment Robslob
Robslob's picture

Don't blame them...they are just trying to get it back before the government steals it "legally".

Well played Amerika...well played!

Thu, 06/09/2011 - 19:18 | Link to Comment hambone
hambone's picture

Full on race to the last bit of cash left...also funny that most 401ks providers offer few to no options to buy anything but long equity / bond funds...the only "safe" asset they offer is the $ denominated money market (phew, I feel so safe sitting in dollars).  Must.  Remain. Invested.

Thu, 06/09/2011 - 19:40 | Link to Comment dark pools of soros
dark pools of soros's picture

the best move is the loan..  you take chips off the table - just manage the rest to break even since you get 100%.. if you aren't getting matching why the fuck are you in one??

Thu, 06/09/2011 - 19:59 | Link to Comment hambone
hambone's picture

I'm in one in current job and only put in the 4% company matches dollar for dollar - just tell me where I can get a 5% return w/ no risk and ready liquidity in case I'm out my job and I'll gladly take the loan out and pay myself the interest?

Thu, 06/09/2011 - 23:06 | Link to Comment dark pools of soros
dark pools of soros's picture

just buy non-perishables ... they will appreciate 5% a year with inflation..

Thu, 06/09/2011 - 19:06 | Link to Comment poydras
poydras's picture

This is unfortunate and indicative of widespread desparation.  Americans have yet to discover that macroeconomic  math applies to them as well.  The psychological adjustment is likely to be most remarkable.  That blank stare shell shock look comes to mind.

Thu, 06/09/2011 - 19:12 | Link to Comment Greeny
Greeny's picture

That's why uncle Benny should keep pumping the Market, since

not only Americans 401k's but also FED balance sheet depends on

Market performance. Well should at least keep PPT busy and ready for

action in case of gloom and doom moments.. So far, so good.

Volatility kept as low as possible.

What interesting though, many stocks I watch already near 2009

lows, while DOW acting flat.. :) Like for example

small cap Gold Stocks nearly

cut in half, while price of Gold stays the same.. But on the

other hand miners always weak during summertime..

Slowly (day by day) loading up on miners while they are on sale

to have a nice present by Christmas.. ;)

Thu, 06/09/2011 - 19:13 | Link to Comment colddirt
colddirt's picture

I borrowed against my 401(k) back in 2007 and bought gold and silver....other than getting a divorce it was the smartest thing I ever did!

Thu, 06/09/2011 - 19:14 | Link to Comment Mike7.62
Mike7.62's picture

Already did it once to make a down payment on some land. Now the land and the loan aginst the 401k are paid back. Would like to do it again so that I can self finance a cottage on the land, which I would also pay back, but I am unable to do so because it hasn't quite been two years since payoff. If I did lose my job, I would have a place to live that was free and clear, and still have money in the remainder that I could roll to an IRA, IF and this is the big if, .gov doesn't confiscate the 401k's and IRA's and turn us all into GRA's as has been proposed by Congress, and is currently undergoing studies for implementation by Treasury and Labor. Don't see the downside given that probability.

Thu, 06/09/2011 - 19:27 | Link to Comment TheMerryPrankster
TheMerryPrankster's picture

Buy an RV, build a concrete slab,an awning and power/water hookups and live in that until you can save enough to build a cottage. you can live on site and do the contstruction when you get laid off in the next wave of the economic collapse.

I'd build a large out building to be used as a shop, not much fun working outdoors when the weather is inclement.

Another 401k loan is like burning the bridge behind you, not much chance of backing up if the road ahead is blocked.

Thu, 06/09/2011 - 19:55 | Link to Comment iDealMeat
iDealMeat's picture

+1, to that..  And double up on the hookups so you can park a buddies RV next to you. Or lease the space..

 

Thu, 06/09/2011 - 19:25 | Link to Comment Kickaha
Kickaha's picture

People want to pay their debts.

But this is horribly stupid.  These folks are behind on their mortgages, and they don't really understand that they owe $100,000 more on them than their home is worth right now.  So they spend their retirement rather than walking away.

The 401k is 100% exempt in a Chapter 7 bankruptcy, meaning the debtor gets to keep it, no matter how large.

They are heading for bankruptcy, anyway.  Pretty much everyone will be there sooner or later.  They will lose their homes to foreclosure, too, since there is nothing to help them once the 401k is maxed out.  The will come out of bankruptcy with no retirement funds other than the promise of a Social Security check and Medicare.

But they just want to pay their debts like they promised.  It's sort of noble in a way, like the charge of the light brigade. 

Thu, 06/09/2011 - 19:31 | Link to Comment Greeny
Greeny's picture

He-he that's why I have 0% Debt, I mean Total Absolute ZERO.

Do not owed anyone a single penny.

Thu, 06/09/2011 - 20:23 | Link to Comment topcallingtroll
topcallingtroll's picture

Wrong lesson from the post.

Have lots of unsecured debt and assets that are exempt from bankruptcy.

Thu, 06/09/2011 - 19:26 | Link to Comment Smiley
Smiley's picture

Stopped my 401k contributions, took out a loan, and bought a couple ounces of gold.  I'm already substantially ahead of the full payback amount.  Everybody I know with half a brain for finance is cashing out or borrowing against their 401k's for real estate or PM investment.

Fri, 06/10/2011 - 05:34 | Link to Comment OldPhart
OldPhart's picture

Did the same in 2007 when I saw the change at the business I'm controller for.

In my mind, the basics are as follows:

I take a loan for up to 50% of what I had in 401k (plan rules limit the amount)

I pay myself interest on the loan, 6.5%.

I have a base of interest earnings on my withdrawal of 6.5%, the balance of funds are actively monitored and moved weekly.  Return for 2008 was 16%, 2009 14%, 2010 23%, YTD 10% (bad choices and timing).

I'm paying the loan over a five year period and will take another in 2012 from a much higher base.

If I lose my job, I will take a distribution and they will withhold the 10% tax.  The distribution will be for the value of my account less the remaining balance of any loan.

Proceeds will be used to prepay my mortgage for at least two years and I would still have a modest amount to buy a gold coin or two.

To me, this seems like the best way to ensure a base of interest while working and paying the loan to myself off.

 

Sun, 06/12/2011 - 03:28 | Link to Comment longorshort
longorshort's picture

I see stupid people everywhere. Borrowing against a 401k is one of them.

Thu, 06/09/2011 - 19:29 | Link to Comment Bobbyrib
Bobbyrib's picture

I very much doubt the government will confiscate 401K's and IRA's. Don't you think the Republican house would reject such a plan? The more likely scenario is that they go after PM's (sorry to say).

Thu, 06/09/2011 - 19:39 | Link to Comment hambone
hambone's picture

Uh, not likely.  One is a highly controlled and regulated source of cash (easily confiscated (taxed) at higher rate, etc.) vs. looking for unregulated metal (what, searching house by house w/ metal detector?).

They will come after your cash w/ all variety of means testing, a "simple" change of tax rate paid equal to that of your working life rather than your post retirement lower tax bracket...think creatively because they certainly will come up with ways to seperate you and your cash (they'll try w/ PM's but easier to hide these and remain in black market mode).

Thu, 06/09/2011 - 20:07 | Link to Comment Bobbyrib
Bobbyrib's picture

My prediction is an FDR type of confiscation for PM's. Outlaw private ownership and go after large known private stashes.

To change our tax rate, they would have to pass a law through Congress. I have half of my retirement funds in a Roth IRA. Once I saw our debt, I knew they would jack up taxes by the time I retire (30+ years from now).

 

 

Thu, 06/09/2011 - 20:24 | Link to Comment hambone
hambone's picture

Bobby, Bobby, Bobby,

won't argue w/ the fact they may come after PM's...but you gotta realize they will change all the rules...tax deductibility of mortgage interest, tax free deductions of IRA's or simply taxing all retirement money 1% annually (as they have now initiated in Ireland).  Forget what they told you...that was then.  Now they will tell you something different.  The hungry, the poor will need your money.  Politicians will redistribute the wealth to save the majority of our society that will be without.  At least w/ PM's you have a chance to hide 'em.  Your Roth is just waiting to be looted bit by bit, tax tweak by tax tweak.

Fri, 06/10/2011 - 07:15 | Link to Comment Bobbyrib
Bobbyrib's picture

I'm aware that they eventually will change Roth IRA's tax free status, it is too tempting to see all that money and not try to get their hands on some of it. Pre-tax money IMHO is going to be "more fucked" than post taxed money.

The point of my posts is that I don't think they will outright confiscate 401K's and IRA's. They may tax them more, but I seriously doubt they will outright steal and consolidate them into a GRA. People will not stand for a second retirement Ponzi scheme.

 

The other issue, I wish I had paid cash.

Thu, 06/09/2011 - 19:47 | Link to Comment LauraB
LauraB's picture

The Obama administration will do it outside of CONgress by using the Dept. of Labor and Dept. of Treasury to make/change the rules regarding retirement income.  They already put a proposal forward last year to annuitize 401ks under ERISA and the IRC-- i.e. confiscate your 401k and give you a stream of income in retirement (they keep the principal you've saved).  See this article from last year: The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization of 401(k): http://www.zerohedge.com/article/treasury-soliciting-your-feedback-regar...

I've posted below asking if anyone has more information on an article from Market Watch on May 31 regarding something in the White House's "Friday dump" before the Memorial Day weekend that supposedly alludes to 401k and IRA confiscation.  If anyone is interested or has more info please see my other post and reply.  Thanks!

Thu, 06/09/2011 - 20:13 | Link to Comment Bobbyrib
Bobbyrib's picture

That article is from a year ago. We have not heard anything about it since. It's probably just a bunch of birthers spreading misinformation to help someone else get elected President in 2012. It is surprising that the retirement accounts of government employees have been borrowed against to help fund our government.

Thu, 06/09/2011 - 20:37 | Link to Comment LauraB
LauraB's picture

No, the Market Watch article that I mentioned to you (described more in my post later in the thread) is from May 31, 2011.  The author says that there was something in the White House's "Friday dump" of press releases outside of the news cycle (so noone covered it) before the Memorial Day weekend that, "On the surface, a reasonable person might conclude that the Obama administration is planning to raid pension and retirement savings plans for trillions of dollars to pay for the budget-breaking cost of Obama-care."  I've been trying to find out what document he was referring to so that I can read it, but have had no luck.

Also, the solicitation of comments regarding new rules last year is important because they have to ask for public comment before implementing them.  If they've already completed the comment period and any other necessary steps, the structure may already be in place.   As soon as the market tanks again and people are really scared, they can say that they are implementing these new rules to "protect us" by giving us a guaranteed income stream in retirment.  After all, we know this administration "never lets a good crisis go to waste". Also, the administration has been trying to do things like Cap and Trade by using the EPA since CONgress wasn't passing it and Obama went to war in Libya without getting a declaration of war from (or even consulting) the CONgress and hasn't left despite the time under the War Powers act being up.  Therefore, this administration really doesn't have any regard for the Constitution or separation of powers.  They just do what they want.

Thu, 06/09/2011 - 22:54 | Link to Comment Bobbyrib
Bobbyrib's picture

"After all, we know this administration "never lets a good crisis go to waste". Also, the administration has been trying to do things like Cap and Trade by using the EPA since CONgress wasn't passing it and Obama went to war in Libya without getting a declaration of war from (or even consulting) the CONgress and hasn't left despite the time under the War Powers act being up.  Therefore, this administration really doesn't have any regard for the Constitution or separation of powers.  They just do what they want."

 

Yeah and they have been illegally spying on the country for nine years (Patriot Act), but the FEMA camps still haven't been implemented yet.

Thu, 06/09/2011 - 19:26 | Link to Comment chrisd
chrisd's picture

My dad had to do this. Has been underemployed for 2 years now - college professor.

Thu, 06/09/2011 - 19:32 | Link to Comment TheMerryPrankster
TheMerryPrankster's picture

I hope he doesn't teach finance.

Thu, 06/09/2011 - 19:54 | Link to Comment Long-John-Silver
Long-John-Silver's picture

I know a couple of college professors working at McDonald's. They sell me sausage biscuits and a diet coke mornings.

Thu, 06/09/2011 - 20:19 | Link to Comment navy62802
navy62802's picture

I bet they make a mean sausage and biscuit.

Thu, 06/09/2011 - 19:28 | Link to Comment Missiondweller
Missiondweller's picture

Wait wasn't this the whole reason Bernanke was pumping up the stock market? So we'd have a new piggy bank to withdraw from and go out and spend?

Its all part of the Bernanke plan.

Thu, 06/09/2011 - 19:33 | Link to Comment BlackholeDivestment
BlackholeDivestment's picture

http://www.youtube.com/watch?v=vfUdUNekrkI&feature=channel_video_title

Well, if they used the lone to BTFD Cup of Fornication they will kill  ''the bird'' with the gold stone. http://www.youtube.com/watch?v=lwx2ce_AyOE

Thu, 06/09/2011 - 19:34 | Link to Comment hambone
hambone's picture

Worst of all, in the vein of taking a loan out against yourself and then loaning the money to someone else to get interest at a rate lower than your original loan...

Italy 10yr now @ 4.8%, Spain 10yr @5.8%...Ireland, Portugal, Greece all getting money at 5% from ECB/etc. ...um, how long before those Spanish / Italian bonds break higher and all olive skinned iberians / italians are paying significantly more for their debt than the loans they are making to Ireland, Portugal, Greece???  Funding their friends at a negative spread not likely to last long?

 

Thu, 06/09/2011 - 19:43 | Link to Comment razorthin
razorthin's picture

Hey, watch with the racist "olive-skinned" references. You are offending my Guinea ass.

Thu, 06/09/2011 - 19:43 | Link to Comment hambone
hambone's picture

is there a more PC term for folks living on the iberian penisula? (the broke but bronzed; etc.)  cause I'm all about PC'ness.

Thu, 06/09/2011 - 19:48 | Link to Comment razorthin
razorthin's picture

Just busting.  I called myself a "Guinea", didn't I?  No really though, I bleed red, white and blue just like my fellow libertarian gumba Judge Napolitano.

Thu, 06/09/2011 - 19:52 | Link to Comment hambone
hambone's picture

Listen Mr/Mrs Razorthin,

this is fight club...you question my stupid comment w/ an equally stupid comment, then it's on...that's like the fourth rule of fight club.

Now come up w/ a better name for la gente de vives in Espana...ahorra!

Thu, 06/09/2011 - 20:14 | Link to Comment topcallingtroll
topcallingtroll's picture

Piel de aceituna?

Thu, 06/09/2011 - 20:26 | Link to Comment hambone
hambone's picture

Senior Troll,

muchas gracias!

Thu, 06/09/2011 - 20:27 | Link to Comment razorthin
razorthin's picture

Olive pelle

Fri, 06/10/2011 - 11:51 | Link to Comment Bam_Man
Bam_Man's picture

"greasers".

Thu, 06/09/2011 - 19:31 | Link to Comment LauraB
LauraB's picture

Did anyone see this article from Market Watch?: Wheel of (mis)fortune: Commentary: Obama administration takes retirement savers for a spin: http://www.marketwatch.com/story/wheel-of-misfortune-2011-05-31  It says:

Behind the White House doors

Buried in last week’s “Friday dump” of White House press releases preceding the three-day weekend (outside the news cycle so the financial press ignores it), was a potentially sinister plan aimed at your American Dream of retirement with dignity.

On the surface, a reasonable person might conclude that the Obama administration is planning to raid pension and retirement savings plans for trillions of dollars to pay for the budget-breaking cost of Obama-care. 

 

I don't have a subscription, so didn't get to read the whole thing.  Does anyone know what this guy is talking about in the "Friday dump"?  Since the administration is already confiscating pensions of federal employees to pay the debt, it is not a stretch to think they will go after private 401(k)s and IRAs under the guise of protecting us.  After all, CONgress has been talking about it for a few years now. -- See: New Lame Duck Threat to Bailout Union Pensions http://www.humanevents.com/article.php?id=39336 and other articles on guaranteed retirement accounts.  Also, last year there was an article on Zero Hedge about the Department of Treasury asking for comments on the plan: The Treasury Is Soliciting Your Feedback Regarding Proposed Annuitization Of 401(k): http://www.zerohedge.com/article/treasury-soliciting-your-feedback-regar...

Does anyone know either what was in this article or what was in the document from the administration that the author is talking about?  Any information would be appreciated.  Thanks!

Thu, 06/09/2011 - 23:11 | Link to Comment Clycntct
Clycntct's picture

LauraB ? did you read the posted link?

"Your Feedback Regarding Proposed Annuitization Of 401(k): http://www.zerohedge.com/article/treasury-soliciting-your-feedback-regar..."

It has the pdf in it. http://www.zerohedge.com/sites/default/files/2010-02028_PI.pdf

" what was in the document"

Thu, 06/09/2011 - 23:45 | Link to Comment LauraB
LauraB's picture

That is not the document I'm asking about.  That document was from last year.  I'm asking about the document referenced in the Market Watch article "Wheel of (mis)fortune" from May 31, 2011.  I don't have a subscription to the author of that article so I couldn't read the whole thing -- just the part that I posted.

The Market Watch article says that the Obama administration put out a press release in a "Friday dump" before the Memorial Day weekend (this year) after the news cycle so that the financial press wouldn't cover it.  It goes on to say, "On the surface, a reasonable person might conclude that the Obama administration is planning to raid pension and retirement savings plans for trillions of dollars to pay for the budget-breaking cost of Obama-care. "

I came across the article while searching for updates on possible 401(k) confiscation.  The google results for the article said, "(2) All barriers restricting conversion of 401(k)s to self-directed Roth IRA ... to get your savings out of harm's way before they face near-confiscation. .."  When I opened the article, the only part I was able to read was the part I quoted in my original post, not the part that showed up in the google search results.  I'm asking if anyone has read this article on Market Watch and can shed some more light on what was in the rest of the article or point me to the document that the administration released before Memorial Day so that I can read it for myself.

Thu, 06/09/2011 - 19:47 | Link to Comment Caviar Emptor
Caviar Emptor's picture

The vicious cycle. Anything and everything that can be sold, borrowed against or bartered will be until only the bare walls and floors are left. I'm not just describing what individual people are doing. It's a tell on the much wider economy as a whole. Because there was a lack of reset, people owe money on assets that are way unrealistically mis-priced, and their cost of living is way out of proportion to their purchasing power. 

So it's now set in stone that we will have another crash. 

Thu, 06/09/2011 - 19:48 | Link to Comment Long-John-Silver
Long-John-Silver's picture

I took everything out of my G-fund account and closed it out. I took the huge tax penalty for doing that. Everyone tried to convince me I was doing the wrong thing. Now look at what has just happened. The G-fund has been raided and will be empty by August-2 this year. If I had a 401(k) account I would be doing the same thing. If they will screw government workers out of their G-fund retirement accounts what makes anyone think they would never do that to the "people"? I'm still in shock they did not raid the 401(k) accounts before raiding government employee retirement funds. BTY I bought Gold and Silver with what remained of my G-fund after taxes. I've still done very well even after this latest take down of Silver having more than doubled my Gold investment and more than tripled my Silver investment all of which is physical.

Thu, 06/09/2011 - 21:20 | Link to Comment Head_Shots_Work
Head_Shots_Work's picture

Very nicely done LJS. I did this and also a couple of buddies (who are a part of my 'SHTF' compound team) did this also. I never want to be back in equities. It's time to beat the plowshares into swords.

Thu, 06/09/2011 - 19:47 | Link to Comment Cassandra Syndrome
Cassandra Syndrome's picture

If the rate of interest on borrowing is lower than the compound rate of the return of investment on the 401K minus the rate of inflation then the overall rate of discount for future spending is too low and therefore infers higher current time preferences  premiums encouraging consumption for the day to satisfy instant gratification.

Thats the psychology of it all. People need a high rate of discount to save for future time preferences. Its now their higher valued preference system works.

 

 

 

Thu, 06/09/2011 - 19:48 | Link to Comment Silver Dreamer
Silver Dreamer's picture

Oh, I don't know.  They could outlaw private ownership of PM's.  That sure would suck, huh?  Those of you purchasing it with physical delivery better have one hell of a good security system and a small army to defend it from the thugs AND jack boots.

Thu, 06/09/2011 - 19:59 | Link to Comment Long-John-Silver
Long-John-Silver's picture

Plastic pipe and caps along with a descant bag buried under re-bar reinforced concrete. It will take me a week of hard work to retrieve it.

Thu, 06/09/2011 - 21:05 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Purchased through an out of state shell company with corporate offices in an offshore island nation, opaque corporate structure of which has silent partners with multiple aka's a few of whom are certifiably dead. 

Thu, 06/09/2011 - 21:37 | Link to Comment Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Make sure you have the proper gold/silver to lead ratio!  How would you like the globalist henchman job of going from house to house to confiscate precious metals?  Life expectancy 2 1/2 weeks.

 

Tuco Benedicto Pacifico Juan Ramirez

Thu, 06/09/2011 - 19:49 | Link to Comment prophet
prophet's picture

The loans are paid back with after tax dollars.

Thu, 06/09/2011 - 22:53 | Link to Comment Mr. Mandelbrot
Mr. Mandelbrot's picture

Not if they're paid back with the same borrowed pre-tax 401-k funds having yielded a return in excess of interest / taxes while being utilized. . .

Thu, 06/09/2011 - 23:32 | Link to Comment prophet
prophet's picture

The loan is paid back with after tax dollars irregardless of whether you earned money (net of any gains taxes) with the loan proceeds. 

The hurdle rate is high.  If you access 100k of money that was socked away pre-tax and you are 25 percent bracket (fed only) then you need short term gains of about 133k to pay it back or for pms a bit higher at 28 percent.  Margin rates and most other loans are better deals.  On long term gains its a bit more reasonable.  For those people slugging it out earning wages its tougher as their hurdle rate not only includes income tax but also payroll taxes.    

Thu, 06/09/2011 - 19:56 | Link to Comment Henry Chinaski
Henry Chinaski's picture

About a year ago Zero Hedge posted an article titled: "Record Number Of Americans Using Retirement Funds As Source Of Immediate Cash"

It didn't take an extra eye to see that coming.

Thu, 06/09/2011 - 20:05 | Link to Comment gwar5
gwar5's picture

In Obamaworld these are not records, these are mere speed bumps.... 

Before people tap out their IRAs and 401Ks, our benevolent and paternalistic Treasury might have no choice but to confiscate them, for our own protection, so we don't go nuts and blow it all in this recovery.  

Pirate Classes: 401K money can still be used, sans penalty, for job retraining. 

 

Thu, 06/09/2011 - 21:09 | Link to Comment John_Coltrane
John_Coltrane's picture

Here's a interesting idea.  If it appears the government is going to seize IRAs or 401ks, just convert everything in it into out of the money (OTM) short dated calls (the right to buy at a higher price) on GM, C, and AIG.  Just like dumping it all in the trash given the government already owns these and want to dump them on the private sector.  So instead of a source cash to fund the government they have the right to pay even more to buy the rest of GM, C, and AIG!  (Disclosure- I'd have to convert all of my long dated ITM puts onf GM, C and AIG since I'd hate the FEDs to recover any of their funds in these losers by exercising my puts)

Thu, 06/09/2011 - 20:38 | Link to Comment topcallingtroll
topcallingtroll's picture

Taking a loan is a good way to improve the fixed income portfolio of your retirement account.

10 percent of my solo401k consists of low rated troll bonds that I pay myself a high interest rate!

Many people take a loan because it is a good way to stuff more cash into their retirement accounts. They dont take the loan because they need the money.

Thu, 06/09/2011 - 20:10 | Link to Comment Ag1761
Ag1761's picture

OMG what a sad day.

 

If they bought PM's then respect, or clearing debt, maybe but I fear not.

 

 

Thu, 06/09/2011 - 20:15 | Link to Comment Yes_Questions
Yes_Questions's picture

Early Redemption!!

Won't you help to sing
These songs of freedom?
'Cause all I ever have:
Redemption songs,

(Early) Redemption songs.

Thu, 06/09/2011 - 20:21 | Link to Comment Sokhmate
Sokhmate's picture

LOL. this fraud called 401(k) cracks me up. it should be called 401(K.O.)

so, it is your money. locked up. You want it? take a loan against it. pay interest on it. Bascially, a BOHICOAOA (bend over; here it comes over and over again)

Thu, 06/09/2011 - 20:56 | Link to Comment Watts_D_Matter
Watts_D_Matter's picture

You pay the interest on the loan back to yourself....Usually Prime plus 1....And the most they can borrow is 50K...not buying much with 50K these days...

Thu, 06/09/2011 - 22:53 | Link to Comment pitz
pitz's picture

I like to call it a 401(gay).  Not only does it rhyme, but you'd have to be pretty gay to lock your money up in something that the government essentially controls.

Just a reminder, SUKI (tm) is a motherfucking Japanese religion, The New World Religion (tm).

Fri, 06/10/2011 - 00:54 | Link to Comment malek
malek's picture

+2   one extra for the non-PC

Thu, 06/09/2011 - 20:22 | Link to Comment pan
pan's picture

Indentured servitude, bitchez!

Thu, 06/09/2011 - 20:30 | Link to Comment flyr1710
flyr1710's picture

that means you actually have a job and are in a 401k plan.  once you get laid off, then you owe tax on it

Thu, 06/09/2011 - 20:44 | Link to Comment Ignorance is bliss
Ignorance is bliss's picture

I pulled out my 401K and bought Gold and Silver with all of it. In 20-30 years when I retire I want the metal with me. Better a look in the mirror to see who Fd up then some nameless prick. 

 

Also with 1 out of 7 people in America on food stamps does it really suprise anyone that 401K money is being withdrawn?? Even if its not for the guy working it's probably a loan for his kid's college tuition.

 

 

Thu, 06/09/2011 - 20:56 | Link to Comment Myzery
Myzery's picture

Please tell me whats wrong with this 7-step 401k strategy.

 

1. self-direct 401k

2. 80% GDX 20% Cash

3. take out 50% loan

4. buy physical

5. beat your loan's interest rate on either end

6. Quit your job, take early withdrawl as income, enjoy life

7. profit

 

 

 

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