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The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k)
Yes, slowly but surely it is happening. In a federal notice filed earlier, the DOL and Treasury are soliciting a response on what has been on many investors' mind, namely the process of converting 401(k)s into annuity-like products. To wit:
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. The purpose of this request for information is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue.
A cursory read of the document does not seem to ask about a flat out regulatory requirement for annuitization. We point your attention to item 13:
13. Should some form of lifetime income distribution option be required for defined contribution plans (in addition to money purchase pension plans)? If so, should that option be the default distribution option, and should it apply to the entire account balance? To what extent would such a requirement encourage or discourage plan sponsorship?
For readers who feel compelled to respond to this increasignly socialistic and ludicrous development, we suggest you voice your anger at the following address:
- e-ORI@dol.gov. Include RIN 1210-AB33 in the subject line of the message
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Wow, just, wow.
I questioned whether 401(k) liquidation was the route to go back in late 2008. At that time everyone I discussed it with really didn't give it much consideration so I rolled it into foreign equities not funded in US $, which has done very well btw. But now if this is where the future is headed, and I feared back in 2008 that this would come, I'll wish I had done it back then when the hit would have been less and Uncle Sugar would have gotten less.
This really pisses me off!
This administration apparently doesn't understand the concept of spending cuts, and I mean real spending cuts like getting rid of worthless deparments and agencies that do nothing but suck the life out of people and the economy. This is not what this country is supposed to be about.
I believe that one can avoid the 10% premature penalty tax by taking distributions in substantially equal payments for a minimum of 10 years or until you reach the age of 59 1/2.
Actually it is 5 years AND age 59 1/2.
A great site to get details is http://www.72t.net/Home
(No, it's not my site)
Of course this means you'll be getting a very small portion of your retirement account out each year and you'll have to separate from service to do it.
Not much difference between this and a bank holiday, is there?
Hey, maybe we should have a little fun before they screw us to death. Any guesses which insurance companies are going to get in on the deal?
I've seen AIG in a couple of posts.
How about companies through AARP?
I would guess ol Warren B will be looking to buy an annuity company shortly.
Any other guesses?
(First prize is the satisfaction of knowing you're catching on to this f-ing confiscatory gov't, which, is actually worth more than the dollar at this point!)
The red umbrella will DIE. For it's arrogance against the rain.
There is no one here in my opinion that really knows what is going on here.
I have long ago fought a great battle with corporate America over my retirement.
My old company moved us form a defined retirement pension to a CASH BALANCE PLAN.
I got out with a reduced LUMP sum.
Now, who knows anything of truth here? YOU HAVE NO idea what truth means unless you tell it........
If you do not know what this is all about then please stay on sidelines...
cbplan4u
That's right, none of us could understand, since we weren't all lucky enough to work at some company that had a defined benefit plan...
boo hoo
I'll bet you're also the only one in the room "professional enough" to handle a Glock .40, eh?
My email:
So now in a lame attempt to plug the deficit and aid in the ability to reduce Quantitative Easing you have decided to steal people 401k's. The Social Security Trust fund was formed in 1935. 74 years later it is insolvent. There is no trust and there are no funds in the fund. Greenspan increased the tax 2x to fix it and Congress looted it. If I ran Calpers and borrowed pension money I'd be sitting next to Madoff. You people are hypocritical lying bafoons. Inept and incompetent crooks. The government is insolvent. Shrink it, don't loot the peoples life savings to toss it in the next bubble (THAT WOULD BE THE BOND MARKET FOR THOSE MORONS LIKE BERNANKE WHO COULDN'T FIND A BUBBLE OR HIS @SS WITH BOTH HANDS AND THE LIGHTS ON)
I emailed this to the DOL:
Re: RIN 1210-AB33
Attn: Secretary of Labor
Having read your proposal, I have to say, I am not impressed.
The gist of your proposal is to sweep all/part of a person's IRA or 401(K) balance into a government sponsored annuity. While your intention is noble, the idea is terrible and should be scrapped immediately.
The most obvious question is: why is the government even involved? The private sector has offered annuities for many years, and the regulators closely monitor the capital levels of the insurers to make sure policy holders don't get screwed. This system works well, but people aren't really cashing out their 401(K)s and rolling them into annuities.
Why is this? Perhaps the market is telling you that people don't actually want annuities. Or, even if this is a behavior flaw, I don't see why the government has to get into the annuity business itself. Why doesn't it just offer a further tax deferment for people to roll their balances into qualified annuities managed by the private sector? Why create another huge bureaucracy and let the government take on investment risks?
The second big concern is:
Let's assume the government got into the annuity business and received some umpteen trillions of dollars in 401(K) funds in return for an obligation to provide income for the rest of the retiree's life.
What will the government do with this money? Do you seriously want the government to take on this level of investment risk and potentially create yet another unfunded tail liability when we have so many already?
Of course, for a "risk free" return, the money could simply be deposited in long dated treasury securities. I believe we already have a government program like this: citizens pay small amounts over a long period of time into a fund, the fund is largely invested in treasuries, and the government implicitly guarantees the citizen a certain amount of income for the rest of his/her life. Yes. You guessed it. This program is called Social Security. Why do we want a second social security program?
The problems don't end there. Under this program, the Treasury would be competing explicitly with a number of private sector enterprises that already offer annuities. The Treasury is obviously a very powerful organization and can strongarm people into this program through the carrot or stick (it doesn't matter). But, assuming the Treasury competes "fairly", one of three things will happen:
1) The government would not be able to offer as high of a retirement income than the private sector, because the government would be invested in much lower yielding "risk free" treasury instruments. This would cause the treasury's program to fail because they would be unattractive to investors.
2) The government would have to take a major role in capital markets and make investment decisions with trillions of dollars. This opens a huge cans of worms about the government's role in capital markets and possibly opens the door to all sorts of corruption and abuses, or just plain old incompetency involving a substantial portion of our GDP.
3) The government creates yet another huge unfunded open ended liability -- if the treasury offers high annuity payments that are not supported by the income generated by its escrowed funds.
I would add to this list a fourth very real possibility:
This program would be a short-term way of paying for our giant fiscal deficit. Just like Social Security, the DOL's proposal would generate an immediate flow of money which would be available to fund immediate spending and thereby kick the can of our profligacy many years down the road. This is not healthy, both for the government and for the nation.
Anyhow, I highly doubt you would take my advise. I see the political expediency to this program: protect retirees, fund the deficit. It's a win-win situation, right? Well, that's just smoke and mirrors. I hope someone reads this missive and pays attention to it, but my hopes are not so high.
I have to say I saw this coming. For the last four years I have been raiding my IRA (divided by 4 to lessen the tax pain / not get bumped into higher bracket) I pay the last penalty with this years taxes. With the proceeds I purchased gold in '06, '07, '08, and '09 for a dollar cost average price of $765. The 50% gain on my gold has more than covered the tax hit on the IRA withdrawls. And now, I don't give a friggin' hoot what they do! IRA confiscation with a few key strokes sure seems easier than gold confiscation (Oh yeah! they did that once too!) Same gov't - different era.
I think you're all reading this wrong. Face it. Most Americans don't save so a "defined benefit plan" is probably the better deal for most Americans because with a defined contribution plan of zero, I can assure you your retirement will suck. And what does this have to do with the U.S. Treasury trying to steal retirement money?? Is there an assumption that 1) all 401Ks are in Treasuries, 2) The U.S. Government will run the annuity? 3) The lump sum withdrawl will no longer be available? Somebody please correct me, but seems like some serious GOP spin on this trying to protect business from picking up the retirement tab. Just a hunch.
I can't tell if this is 100% sarcasm, or if you are one of the monkeys. I'm thinking probably the latter. People who save should get the benefit of saving. People who don't save, tough.
They don't eat right or exercise enough either, so you saying we should solve that problem for them also?
Let me help connect a few dots:
Last week they discussed making sure money market accounts were chock full of Treasuries, and could restrict withdrawals;
They want to automatically enroll (with an opt-out) employees not just in 401k's but also mandatory IRA's if employers don't have a qualified plan;
Now they want to make retirement plans into annuities (which invest in a lot of ?) I'll let you fill in that blank.
See why some of us who are advocates for personal responsibility are getting a bit peaved and paranoid?
Sit quietly and imagine this for a second.
We got out of 401k. We got out of everything similar. We carefully adjust withholding to stay ahead of taxes each year. In fact, the recent $250 stimulus was given back to government in form of withholding.
We have just one 401k left. We cannot touch it. Except quitting work or getting fired Then we will get that check in a few days. It's only a few hundred dollars. *Shrugs.
Now imagine a future where there are no 401k, Social Security is insufficient, debt and interest ravages our society. Everyone wants thier money and they want it now. There will be a rise in JG Wentworth type businesses like weeds all over the same as Payroll Cashers did before they got run out of town. Sure we will give you $350 on that $400 dollar check due next Friday.
We will be reduced to a Society that relies on April 15 as a day of reckoning. Imagine all parts of our Society waiting until that day to learn thier fate, Refund or additional Tax?
Then everything moves quickly for a month, providing a illusion of boom times until next April 15.
What are we to do?
Nothing, I tell ya, nothing.
Nothing?! Easy. Stop going to malls and spending money you dont have. Stop falling for those 10% off promotions with store credit. Stop trying to have your Employer deduct so much money for everything that you have to eat hot dogs and oatmeal twice weekly to have the strength to be present at work.
This whole National Experience is slowly becoming sort of like a gigantic perverse twist on the old Movie "TRON."
If you are too young to have ever seen "TRON" Go watch it on DVD sometime. You will see my position.
The idea that we even have an EBSA just blows my mind. Now there's something we could cut out and save something....I'm sure there's a lot of other places where we can cut.
Why shouldn't pensioners and 401k contributors be looted? These are the same scum who voted for Bush and Obama. Let's not just take everything they have. Off with their heads!
Remember who we're trying to destroy here: the American people. There is no worthier goal.
Those with 401k accounts are "the same scum who voted for Bush and Obama"?
First of all, people have 401k accounts because most employers offer nothing else. Second, putting money away for one's retirement is a hallmark of personal responsibility (sorry if that rubs you the wrong way.) Third, I'd be willing to guess that I as a 401k contributor am far from the only American who did not vote for either Bush or Obama (dumb and dumber).
And finally, my friend, the American people have already been destroyed; for the piece of evidence most immediately at hand, assess the critical thinking skills (or lack thereof) behind your comment.
If you're serious about the "destroying the American people" part -fuck you. Why don't you head to Iran, or Venezuela where the rest of your "hate America" buddies are.
If I mis-read your comment and you were talking in the third-person, I take the fuck you back. :~)
I have a question... a serious question...
I'm 25. I'm completely jaded... have been since 15. Hated liberals, liberalism, communism, big government, et al.
My serious question: what the fuck am I looking forward to?
Should I just blow my tax refund on a good high powered rifle and plenty of ammo and hope I don't have to use it?
My God! You all have money to buy gold but I'm just getting started paying off my debts. Is there any future left for the honest man? Any hope for the law abiding citizen?
Is war... with all it's hell and fire inevitable?
Cause if it is, what do you all recommend for a good first firearm?
well if your prepared for it in mind ,body and spirit you have an advantage. whats happening is just a transition. when we're through this ,life will be great. follow your intuition.
You should emigrate. SERIOUSLY. There are still places in the world where effort is rewarded and government is not quite so corrupt as ours. (And others where perhaps the corruption can work for you instead of against you.) Most of us have too many roots to move, but it sure doesn't sound like you do. Seriously, look into moving to another country. Here is a short list to look at - no particular recommendation:
Australia
New Zealand
Finland
Norway (good luck)
Belize
Panama
Cayman Islands
Chile
Brazil
China
Certainly each of those countries has its own issues, but all are worth looking at.
If you feel that discouraged, your best bet is just to turn off the computer and enjoy life as best you can. As the saying goes, nothing is inevitable except death and taxes.
You have the rest of your life to look forward to. What you do with it is largely up to you.
Peace.
Bushmaster XM-15, my weapon of choice in case things heat up.
The document Tyler posted has been officially launched in the Federal Register as of February 2, 2010. Here is where you can find on the web:
http://www.gpo.gov/fdsys/pkg/FR-2010-02-02/html/2010-2028.htm
If you want to comment to DOL or Treasury, your comments must be in by May 3, 2010.
outright theft. frankly, this goes thru, I hope everyone takes to the streets.
theft. years of savings...gone to help larry, tim and Ben perpetuate their mistake.
Ah, there is a much easier, non rabble rousing inciting way to stealth annex your future 401k/Ira income stream. Remember that the future income flowing from them provides tax revenues with the exception of the Roth.
No, the first step will be to means test SS, and make all income from retirement, including Roths(dems never liked them), or any other source applicable for reducing SS payments. It would be really easy to have SS payments go down once income hits $30,000, phasing it out by $50,000.
It works really well, reduces SS payments by the government in the future, and still have access to tax revenues of the retirement accounts.
Hell, both Repubs and Dems would be for it.
That's your first step
Roth IRAs are an interesting question. Yes, Dems would love to tax them. But it would seem to break the contracts clause (of that musty old US Constitution) to do so. Wonder where that would end up? Would government have even the tiniest shred of legitimacy after such a stupdendous breach of law?
Here is the real solution to have the government possibly take over retirement funds: If the government wants to try this new idea, first do a sample test with all the pension funds held for federal employees including Senators and Congressmen. After all, the governments already has control over these retirement programs. If this proves to be successful after 20-30 years of experiment, we might listen to this new idea. In addition, the government would also have to return all the funds to the social security and medicare programs and thus demonstrate that they are capable and responsible managers. In the meantime, lay off.
"Hey, look at that pile of middle class wealth over there that no one is using. Let's take that when T-bills start losing value. They aren't using it anyway. And they were so stupid that they bought into the bail out regime and now do more to sell it to each other than we do. We'll just tell them we're protecting them. We'll give it back when we figure out how... someday."
Y'all are a bunch of pussies
George
"Hey, look at that pile of middle class wealth over there that no one is using. Let's take that when T-bills start losing value. They aren't using it anyway. And they were so stupid that they bought into the bail out regime and now do more to sell it to each other than we do. We'll just tell them we're protecting them. We'll give it back... a week after Hell freezes over."
Thought I'd fix that for you, Anonymous #215051.
Seriously, though, I've expected means-testing to be introduced well before my time comes. I also expect them to reduce the specified pay-outs (not merely make no COLAs, actually cut back the amount on the check). And that's in addition to inflating their way out of this and other responsibilities. "Mr. Anonymous, here's the monthly $1600 we promised you. Do you want fries with that? That will cost an additional $400."
Hey, it's nothing personal; it's just that if you aren't paying taxes, you appear to the system to be a u-----s e---r.
I used to tell people that it's too late to change things but to soon to start shooting. I don't think it's too soon any more.
Tell Treasury To Go To Hell!
Mandatory 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!
Also consider reviewing and link to “The Coming Retirement Trap Has Started” posted at http://www.lewrockwell.com/holland/holland12.1.html
You can receive a free copy of the complete 20 page report free by mentioning this website in an email Trap request to ron.holland@bfi-consulting.com
Funny how most of these crooks are from the Jewish community or are Zionists. How is it that a community representing less than 2% of the populace determines what happens to the other 98%. It time to clean the house. Enough is enough. Get rid of the riff raff.
When is this going to be update, when do they vote on this shit?
If they DO I'm cashing the 401k out.
UPDATES PLEASE!
Here's the letter I sent:
To Whom It May Concern,
Do NOT under any circumstances change the rules for employer-sponsored retirement plans or individual retirement arrangements (IRAs) to require that existing money in these plans or new money added to these funds be directed, by mandate, into some form of annuity.
The U.S. government has screwed up its own finances to the point where it is the largest debtor nation on the planet and in the history of the world. Trillion dollar deficits are forecast for years. Unfunded liabilities of medicare and social security dwarf the acknowledged national debt. The largest insurance company in the U.S. completely blew up and is now a ward of the U.S. government. I don't want the U.S. government or companies like AIG, who might be selected to run the annuity plans, taking my money and giving me an IOU.
Additionally, we've seen the U.S. government transfer immense wealth to the very bankers responsible for the current financial crisis. You can bet that the real beneficiaries of forced annuities will be the bankers who administer the plans.
This is just one more example of "extend and pretend". In this case the government would take massive funds from individuals, to make the government's (and favored corporate entities responsible for managing the plans) near term financial situation seem better. But this will be at the expense of the individual and will probably, in the long term, only add to the liabilities of the government - which they are already completely incapable of meeting. (Anyone remember the Social Security Trust Fund? Years of excess contributions to the fund, which might have been saved and invested to support required future payments to retirees, was directed to the general fund and all that remains are IOU's! Nice move! Very prudent! Of course it did seem, while it lasted, to make the deficit seem better - more extend and pretend in action.)
Additionally, the long term financial implications of this action are extremely hard to assess. But I think one thing is guaranteed - It will further distort the investment landscape as trillions of dollars, now managed by individuals, will be funneled into a few firms responsible for managing the plans.
Please keep your hands off our hard earned money - which I might add, has taken many of us a life time of hard work and thrift to accumulate.
You did not work for this money. You did not sacrifice to save it and it is not yours. If you want to give all your own money to the government in return for an IOU feel free to do it. Please don't envision doing it with my money.
The purpose of Social Security is to provide a minimal guaranteed stream of income to people when they retire. You should NOT consider converting these other retirement investment programs into such a plan.
Where is the logic??
But, there again, there is no such thing as political logic without MONEY!
Please, Obama (and staff), stop trying to identify with the American public when you have NEVER been a part of the American Republic.
Please move away from your healthcare concerns and onto National security and the U.S. Economy instead.
The smoke has cleared, and the mirrors aren't working.
Help us, help you.
Obama, you are not the President I voted for,but, you are in a position to help steer this country back to center.
If you would suggest the things that matter to the PEOPLE, such as, Economy=Jobs=healthcare=mortgage crisis over=no concern for concern.
But, as always, you guys in D.C. have to keep us afraid of something. Don't you???
Start running the country for the people, not what you think the peo9ple should for you.
Best of luck to the Administration at hand, but, My God(and yes I said MY GOD), WAKE UP.
I would gladly support you if you would stop treating your Presidency like a reality show,eg:
Backbone.
Intestinal fortitude.
And, STOP BOWING to foreign leaders and
Start lowering your ego to help the WORKING men and Women of this GREAT COUNTRY,
THE UNITED STATES OF AMERICA.
p.s. thi ain't muslim country.
Trust in the Lord, Jesus Christ to guide your life and you will never go wrong. The present crisis is the background for the arrival of the Antichrist. The economic mess of the world has to occur first before his arrival. There are no prophetic situations that have to occur before the Rapture of the true Christians off the face of the earth by our Lord and Savior, Jesus Christ. First receive Jesus as your Savior and let the Holy Spirit guide your whole life. If you listen to him daily, obey God in all of your Christian life, pray, and study the Bible scriptures daily you will make the correct financial decisions for yourself and your loved ones. D Cooke
I am posting on this article to merely keep it alive. Forward to...everyone.
Wonderful idea.
While they are at it, why don't they also create a system that takes a certain percentage, lets say 6.2%, from each person's paycheck and another 6.2% from the employer, and put that away for safe keeping for the individual's retirement.
Now, if only we can come up with a good name for it so we can sell it to the public....
Time to move to another country
Keep your %*&#)^@ hands off my retirement accounts.
It has come to pass that we are once again poised to attack the Federal Government at it's root.
Perhaps Osama has been right all along when he stated that this Government is evil.
I tend to believe him and am ready to defend thyat which is mine and am prepared to die whilst taking others with me.
Don't you also have to show hardship, or something? I can't afford to quit my job. So you're saying it's possible to dog training liquidate a 401-K early, by accepting tax penalties? My 401-K is right at 125K. What kind of hit am I looking at?
While they are at it, why don't they also create a system that takes a certain percentage, lets say 6.2%, from each person's paycheck and another 6.2% from the employer, and put that away for safe keeping for the individual's retirement. Now, if only we can come up with a good name for it so we can sell it to the public.... ebel watches|156-215-70|F50-531|pandora charm
While they are at it, why don't they also create a system that takes a certain percentage, lets say 6.2%, from each person's paycheck and another 6.2% from the employer, and put that away for safe keeping for the individual's retirement. Now, if only we can come up with a good name for it so we can sell it to the public.... ebel watches|156-215-70|F50-531|pandora charm
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The banksters and corporations own the govrnment so this is simply another transfer of wealth from the people to the banksters and corporations.
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