the government would never touch your 401(k) - part II
secondrepublic
Posts: 2,619 ✭✭✭
This was in the press today. You can't make this stuff up! It's called the "SEAL Act." They want to make it harder for non-retirees to take money out of their 401(k)s. Hmmm.... I wonder why?
----
Sen. Herb Kohl (D-WI) and Sen. Mike Enzi (R-WY) announced legislation Wednesday that aims to protect Americans' retirement savings.
As the recession has worn on, many Americans have had to use their employee-sponsored 401(k) plans as “rainy day” funds to take out loans, according to the legislators. The senators cited a recent Aon Hewitt study that found 28% of participants in contribution plans had an outstanding loan. Kohl, who is Chairman of the Senate Special Committee on Aging, said as the frequency of retirement fund loans have gone up, the amount of money people are saving for their retirement, and therefore paying privately for long-term care services, has gone down.
Sen. Kohl himself recently announced that he plans to retire in 2012, though as a multimillionaire and one of the richest members in Congress, he is not expected to have worries about economic hardship.
“The gap between what Americans will need in retirement and what they will actually have saved is estimated to be a staggering $6.6 trillion,” Kohl said. “While having access to a loan in an emergency is an important feature for many participants, a 401(k) savings account should not be used as a piggy bank.”
Kohl and Enzi's Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, or SEAL Act, puts a limit on 401(k) loan practices that provide easy access to retirement funds but add costs and fees. The bill extends the rollover period for plan loan amounts; lets 401(k) participants continue to make elective contributions during the six months following a hardship withdrawal; lowers the overall number of loans that participants can take at one time; and bans products, such as the 401(k) debit card, that promote leakage.
LINK to article.
----
Sen. Herb Kohl (D-WI) and Sen. Mike Enzi (R-WY) announced legislation Wednesday that aims to protect Americans' retirement savings.
As the recession has worn on, many Americans have had to use their employee-sponsored 401(k) plans as “rainy day” funds to take out loans, according to the legislators. The senators cited a recent Aon Hewitt study that found 28% of participants in contribution plans had an outstanding loan. Kohl, who is Chairman of the Senate Special Committee on Aging, said as the frequency of retirement fund loans have gone up, the amount of money people are saving for their retirement, and therefore paying privately for long-term care services, has gone down.
Sen. Kohl himself recently announced that he plans to retire in 2012, though as a multimillionaire and one of the richest members in Congress, he is not expected to have worries about economic hardship.
“The gap between what Americans will need in retirement and what they will actually have saved is estimated to be a staggering $6.6 trillion,” Kohl said. “While having access to a loan in an emergency is an important feature for many participants, a 401(k) savings account should not be used as a piggy bank.”
Kohl and Enzi's Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, or SEAL Act, puts a limit on 401(k) loan practices that provide easy access to retirement funds but add costs and fees. The bill extends the rollover period for plan loan amounts; lets 401(k) participants continue to make elective contributions during the six months following a hardship withdrawal; lowers the overall number of loans that participants can take at one time; and bans products, such as the 401(k) debit card, that promote leakage.
LINK to article.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
0
Comments
<< <i>“...“While having access to a loan in an emergency is an important feature for many participants, a 401(k) savings account should not be used as a piggy bank.”
... >>
HA! J6P just doing what our elected officials have done with the public coffers LOL Congress don't like that! How about the Congressional Spending What They Don't Have Leakage Act?
Leakage. Yup, that's a problem.
I knew it would happen.
Box of 20
I have a very strict gun control policy: if there's a gun around, I want to be in control of it - Clint Eastwood
<< <i>Stuff those mattresses people, with silver and gold instead of paper. >>
Sure, it gets taxed at ordinary income tax rates plus a 10% penalty if it's not repaid. But if I was seriously concerned about government dipping its hands into my 401(k) at some point, or forcing me to invest the assets in government bonds.... taking it out now would be a reasonable strategy. Better to give them 30 or 40% now in taxes rather than lose control over the whole thing.
Especially since, even if the government never actually did anything, you're still going to be taxed on it when you withdraw it during retirement. And who knows what the tax rates will look like then - probably much higher than today.
This proposed new law seems designed to prevent people from heading for the exits if the government ever tries these tactics. The fact that this law is being proposed at exactly the same time that governments in other countries are imposing new taxes or confiscating private retirement plan assets is concerning, even if others might chalk it up to just a coincidence.
At this point, I am only modestly concerned about these scenarios -- I'm not seriously concerned yet. But given what's happened across the globe, most recently Ireland, these things don't seem so unlikely anymore. Five years ago I would have thought all of this was crazy. Now, not so much.
By the way, just so we're clear here.... these plans have trillions in assets. This isn't chump change we're talking about. Far more than all of the Treasury holdings by all foreign governments combined:
Total individual account retirement assets amounted to $8.979 trillion in 2007. Employment-based plan assets such as 401(k)s were $4.823 trillion. Individual retirement account/Keogh account assets were $4.157 trillion.
Link.
<< <i>I would rather pay interest to myself than to any lending institution. >>
So would most of us, that's money that isn't going to a bank, wait a minute .................
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Box of 20