Treasury dips into pension funds to avoid debt

ksammut · January 18, 2012 5:45AM

In case you have not read the below article, here it is. I cannot see this ending in a good way. It would take a tremendous amount of economic growth, very low unemployment, and a huge cut in spending to have things work out well. Sadly, I cannot see it happening.

Treasury dips into pension funds to avoid debt

Wingsrule · January 18, 2012 5:50AM

He did the same thing during the summer. Wonder if the funds were ever returned.

Barndog · January 18, 2012 5:54AM

<< Wonder if the funds were ever returned. >>

TWQG · January 18, 2012 6:13AM

He's running out of accounting tricks. Does Timmy have a bazooka in his pocket like Hank did? "Don't make me take this out"

pf70collector · January 18, 2012 6:14AM

Once the public funds are exhausted they will be going after private funds soon enough under the pretense of a national emergency. The American colonists revolted against Britain for far less. We have far too many distractions today for the sheepie to really care what is being done to them.

PerryHall · January 18, 2012 7:09AM

<< Once the public funds are exhausted they will be going after private funds soon enough under the pretense of a national emergency. The American colonists revolted against Britain for far less. We have far too many distractions today for the sheepie to really care what is being done to them. >>

Will that include union persion funds?

mhammerman · January 18, 2012 7:11AM

"...tryin' to make a dollar out of twenty five cents."

LukeMarshall · January 18, 2012 7:20AM

<< Once the public funds are exhausted they will be going after private funds soon enough under the pretense of a national emergency. The American colonists revolted against Britain for far less. We have far too many distractions today for the sheepie to really care what is being done to them. >>

401ks are next

Mesquite · January 18, 2012 7:40AM

Sure they'll pay it back - in Treasuries.

PerryHall · January 18, 2012 8:24AM

<< Sure they'll pay it back - in Treasuries. >>

I.O.U.'s

derryb · January 18, 2012 9:30AM

This is from the federal employee Thrift Savings Plan (equivilent to a fed employee 401K with employer matching up to 5%). It only affects the "G" fund, one of five that participants can choose from, at will, to direct their investments to. Reason it only affects G Fund is because that it is a fund of government securities controlled by the Treasury Department. As stated in the linked article the Treasury Dept. has done this on numerous occasions to access emergency funds to finance government operation. However, what do you think would happen if a private equity firm that controls one of the TSP's equity funds decided to borrow from the fund to fund it's daily operations?

The remainder of employee TSP "funds" are invested with other entities besides the US Treasury and are not within direct reach of Washington. It's about the same as them borrowing from social security with a promise to pay it back - doesn't really matter, it is all in the the big government pot of money. What matters is will they have money in that big pot when it comes to paying someone as promised.

Before I retired I more than doubled my voluntary Thrift Savings Plan with periodic transfers of funds between I Fund (international equities) and S Fund & C Fund (US equitites). G Fund has historically been the place to park money during market turmoil such as seen in 2008. The good news for taxpayers is that in recent years the federal employee retirement age was raised from 55 with the Thrift Savings Plan (that receives employee contributions and up to 10% matching funds from the employer) becoming a major portion of retirement funding. This shifts some of the federal retiree payment burden from the taxpayers and puts it where it belongs - on the employee. Federal employees are not eligible for social security unless they earned credit for it working in the private sector. Upon retirement, over a two year period to split the tax burden, I paid the tax penalty and converted all of my TSP holdings to a self directed Roth IRA that now grows tax-free.

Forum members who are recently or soon to be retired federal employees feel free to PM me with questions about converting or transferring your TSP.

ricko · January 18, 2012 8:50PM

"Wonder if the funds were ever returned."

Surely you jest....

Cheers, RickO

DoubleEagle59 · January 18, 2012 9:51PM

Doesn't surprise me.

"Robbing Peter to pay Paul"

It just goes on and on.

This is why in these times I just don't understand people who don't get the 'buy gold and silver' strategy.

I'm not talking about making a profit as a day trader or even a 12 month time horizon.

I'm talking about 'preserving' ones' wealth over the long haul.

This whole phoney economy or as some say 'a house of cards' is going to end badly and I'm convinced the one holding precious metals will come out the winner.

gecko109 · January 18, 2012 10:00PM

This whole thing reminds me of that scene in Dumb and Dumber. Where Harry and Llyod find the million bucks in the suitcase and spend every dime.....but replace the money with hundreds of little pieces of paper that are I.O.U.s. "We kept track of everything down to the last penny, we have been meticulous. See this one here? $275,000! Might wanna hold on to that one!"

Wingsrule · January 18, 2012 10:14PM

Excellent explanation of the facts, derryb.

Thank you for your insight.

gsa1fan · January 18, 2012 10:23PM

I wonder if I ever will see my Social Security?

I'm betting on ~ Not a snowball chance in HELL!

Justacommeman · January 18, 2012 10:29PM

<< I wonder if I ever will see my Social Security?

I'm betting on ~ Not a snowball chance in HELL!

>>

Plan for hell no, hope for yes. MJ

derryb · January 18, 2012 11:00PM

Stories of individuals who are not able to live on their Social Security checks should not be surprising. Social Security is not a retirement plan, was never intended to be. It is a supplemental income plan for retirees who should have made their own private arrangements for continuing income. Anyone who believes SS is supposed to be enough to take care of their retirement needs should do more research and more planning.

The bulk of SS funds go to individuals who became disabled during their working years and to surviving dependents of workers who did not live until retirement age.

gsa1fan · January 18, 2012 11:06PM

Speaking of retirement plans they dont mean squat! A good friend retired from GM with 30 years service. Last year at age 70 his retirement medical plans was ceased, cancelled, taken away, & STOPPED.

Justacommeman · January 18, 2012 11:14PM

<< Stories of individuals who are not able to live on their Social Security checks should not be surprising. Social Security is not a retirement plan, was never intended to be. It is a supplemental income plan for retirees who should have made their own private arrangements for continuing income. Anyone who believes SS is supposed to be enough to take care of their retirement needs should do more research and more planning >>

yes. MJ

GoldClause · January 18, 2012 11:27PM

<< 

<< Once the public funds are exhausted they will be going after private funds soon enough under the pretense of a national emergency. The American colonists revolted against Britain for far less. We have far too many distractions today for the sheepie to really care what is being done to them. >>

401ks are next >>

Sadly, I think 401k confiscation will happen as well. We'll all get credit on our Social Security statements for the amount "paid in".

mhammerman · January 19, 2012 12:40AM

"Sadly, I think 401k confiscation will happen as well. We'll all get credit on our Social Security statements for the amount "paid in"."

As discussion...What mechanism would be reasonable for getting the 401's into the individual social security account? Just thinking out loud: so the guy with 200K in his 401 would have it appear in his ss contributions and that would be one years ss contribution or would it be amortized across his total number of positive income years so that the individual had a bigger monthly ss check when they retire? Man, that would be a game changer for the worker bee thinking he's going to retire in Boca and he ends up looking at an $1800 a month check. On the other hand, just confiscating the 401K and giving credit in the individual ss account would really goose the liquidity of the fund pool. Talk about getting your wealth spread around...stunning.

derryb · January 19, 2012 1:10AM

The first attack on 401k's will be a default to buy US Treasuries where account holders do not specify particular investments. This has already been proposed. The second attack will be against their tax savings status to discourage them completely.

GoldClause · January 19, 2012 1:12AM

<< "Sadly, I think 401k confiscation will happen as well. We'll all get credit on our Social Security statements for the amount "paid in"."

As discussion...What mechanism would be reasonable for getting the 401's into the individual social security account? Just thinking out loud: so the guy with 200K in his 401 would have it appear in his ss contributions and that would be one years ss contribution or would it be amortized across his total number of positive income years so that the individual had a bigger monthly ss check when they retire? Man, that would be a game changer for the worker bee thinking he's going to retire in Boca and he ends up looking at an $1800 a month check. On the other hand, just confiscating the 401K and giving credit in the individual ss account would really goose the liquidity of the fund pool. Talk about getting your wealth spread around...stunning. >>

Some European countries have already started confiscating private retirement accounts. Portugal and Hungary are two if I remember correctly. It's not hard, the government just seizes it. It may be a little harder in this country if it has to go through the legislative process, so it will probably happen via an executive order so that people won't have time to organize against it.

The US is facing bankruptcy in the next few years unless things dramatically change soon. Private pensions are the largest untapped pool of wealth there is and greedy politicians are looking at ways to gain control of it. It will be a lot easier for them to do so when the bankruptcy crisis begins.

pf70collector · January 19, 2012 1:21AM

The second attack will be against their tax savings status to discourage them completely.

Yes. they will make the IRAs tax free only if they are in U.S. Treasuries. That makes sense, but it will be voluntary per investor. Not a forced confiscation until the voluntary part fails.

Mesquite · January 19, 2012 2:03AM

What are you guys worried about? This action has been done five time previous to this in the last 20 years. You still have your 401Ks and IRAs don't you. No big deal. And recall that Tim and Ben (and Joe Biden) are the smartest guys in what ever rooms they happen to occupy.

Yes it is a big deal as stated in this article.

I turn 59.5 on election day this year. I'm hopeful that they have not messed with my IRA by that time. I'd like to take some (at least) of my retirement savings "off of the grid" by this time next year.

DrBuster · January 19, 2012 2:09AM

I turn the big 4-0 this year. I have not had plans of having SS in my mind for about a dozen years. It wouldn't surprise me to see forced T-bond purchases for private retirement accounts before I approach 50.

gsa1fan · January 19, 2012 2:12AM

I just turned 50 if IRA's can be taken like 401K's I'm thinking of cashing out & soon. I don't have enough in there to live off more than 4 years anyway at poverty level.

derryb · January 19, 2012 3:54AM

Money can't not be taken from your IRA any more than money can be taken from your savings/checking account. The current concern is changes to IRA tax law to discourage from contributing (removal of tax advantages)as well as a concern of Washington requiring investment in US Treasuries. As the demand for Treasuries drops from other countries Washington is looking for new buyers.

IRAs are a good tax haven for the rich. The wealthy are mostly responsible for their creation. The wealthy will ensure there will always be a way to protect an IRA and its investments. Those that stay abreast of changes will fare well. Those that don't will eventually get automatically sucked into US Treasuries.

Downtown1974 · January 19, 2012 5:57AM

<< Money can't not be taken from your IRA any more than money can be taken from your savings/checking account.. >>

Correct, but if the time ever comes where 401ks are confiscated, that will be the day I empty my savings account too.

Mesquite · January 19, 2012 7:14AM

derryb,

You're working under the assumption that this current bunch honors the "Rule of Law". I think there is plenty evidence out there that they do not and will not in the future.

derryb · January 19, 2012 7:38AM

<< derryb,

You're working under the assumption that this current bunch honors the "Rule of Law". I think there is plenty evidence out there that they do not and will not in the future. >>

They're no different than any earlier bunch, just becoming more brazen. I am assuming that they will get away with what we allow them to get away with and realize if they screw with my IRA they have to screw with their own as well. Fortunately we are still within the rule of law, only they have now found they can change or misinterpret that law.Staying abreast of developments and being prepared to quickly react is paramount to maintaining ones holdings and wealth. For the present I feel my IRA is safe and continue to contribute to it. If I were under the age of 55 I would probably feel differently. For the moment the IRA is a good tax reducer and an opportunity to build wealth. Anything can change.

Mesquite · January 19, 2012 8:25AM

"if they screw with my IRA they have to screw with their own as well". Not necessarily; is not this bunch allowed to get away with insider trading? (That, of course, applies to both Ds and Rs). You and I would go to jail for that same behavior. Those in power are not required to play by the rules that apply to you and me.

"Staying abreast of developments and being prepared to quickly react is paramount to maintaining ones holdings and wealth." I agree. My concern is that the warnings are being given now and the point of no return may occur overnight. The SEC has already established the policy that money market accounts (all money market accounts) can be frozen (see here) - I presume that applies to money market accounts embedded in an IRA. I no longer have cash in money market accounts. Money market accounts are simply low-yield equities. So, what prevents them from expanding that ruling to higher yield equity funds?

I hear what you are saying and I appreciate your position. I am simply uncertain at this point in time. When I get uncertain about things, I get uncomfortable having someone else in charge of my resources.

derryb · January 20, 2012 12:19AM

<< "if they screw with my IRA they have to screw with their own as well". Not necessarily; is not this bunch allowed to get away with insider trading? >>

They are operating within the law (that they wrote) with their insider trading. My point is that if you keep abreast of changes/new law that affect your investments you won't get caught with your pants down. Currently IRA tax law is the same across the board for all, including those same people.

pf70collector · January 20, 2012 12:36AM

When it come to the point where Treasuries are shunned by all and the Fed can't eat their own poop, I believe they will be desperate enough to try anything. Kind of like an addicted gambler who has run out of funds, resorting to stealing, embezzlement, etc. The Pusher (the Fed) will no longer be there to provide their highs, so to speak. This Congress is only looking for temporary fixes, probably just long enough to be kept in office. It is obvious that our Federal Government is immoral for shifting all this debt burden on future generations when those in office now will be long gone. I wonder if those future generations, who had no involvement in creating such burdensome debt,. will vote for a government that refuses to pay those debts off. The U.S. was set up to be governed by the common people, not the distorted plutocracy that we have now. Our constitution guarantees this and the way our government is run will probably change in the future hopefully for the better, but alas, I will be long gone too.

jmski52 · January 20, 2012 12:45AM

This is also the same bunch who operate with a different healthcare plan than the one they stuck onto the public.

I'm 100% with Mesquite on this. It is true that you and I would go to jail by doing the same things that they do. I believe that it will get much worse.

I think that all the evidence is in. They are not our friends.

derryb · January 20, 2012 12:51AM

<< I think that all the evidence is in. They are not our friends. >>

I'm not saying they are. I am saying to keep a close eye on what they do with law (tax law in particular) and you can act to protect your investments. Any major change to current IRA rules and laws will more than likely be foreseeable to those with their eyes open. Right now it's only speculation and gut feeling.

jmski52 · January 20, 2012 12:58AM

True enough. Tax law has always been a significant driver in social engineering schemes put forth by Congress.

johnny9434 · January 20, 2012 2:21AM

sure it will, just like there doing with social insecurity

GoldClause · January 20, 2012 2:42AM

Something else to consider is that if the national healthcare law stays with us, the government will have access to any of your bank accounts, 401k, etc. to force payment as they see fit. Something like 16,000 new IRS agents will be hired under the healthcare law if I remember correctly.

golfer72 · January 20, 2012 9:52AM

<< When it come to the point where Treasuries are shunned by all and the Fed can't eat their own poop, I believe they will be desperate enough to try anything. Kind of like an addicted gambler who has run out of funds, resorting to stealing, embezzlement, etc. The Pusher (the Fed) will no longer be there to provide their highs, so to speak. This Congress is only looking for temporary fixes, probably just long enough to be kept in office. It is obvious that our Federal Government is immoral for shifting all this debt burden on future generations when those in office now will be long gone. I wonder if those future generations, who had no involvement in creating such burdensome debt,. will vote for a government that refuses to pay those debts off. The U.S. was set up to be governed by the common people, not the distorted plutocracy that we have now. Our constitution guarantees this and the way our government is run will probably change in the future hopefully for the better, but alas, I will be long gone too. >>

The Constitution? They stopped following that a long time ago.

UconnL · January 21, 2012 9:12PM

My Guess is that the govt. under the guise of establishing a pool of "lifetime funds" to benefit ones SS check will mandate a % of your individual IRA or 401(k) be invested by them to retain tax status...

Weg · January 22, 2012 2:27AM

I read this thread because I am concerned with different aspects of the future, and am replying to a few things said here.

<< Stories of individuals who are not able to live on their Social Security checks should not be surprising. Social Security is not a retirement plan, was never intended to be. It is a supplemental income plan for retirees who should have made their own private arrangements for continuing income. Anyone who believes SS is supposed to be enough to take care of their retirement needs should do more research and more planning. >>

<< The bulk of SS funds go to individuals who became disabled during their working years and to surviving dependents of workers who did not live until retirement age. >>

derryb, Your first statement is absolutely true, but the second is absolutely wrong. The bulk of SS funds go to retirees, I believe it is less than 15% that goes to dissability.

<< Once the public funds are exhausted they will be going after private funds soon enough under the pretense of a national emergency. The American colonists revolted against Britain for far less. We have far too many distractions today for the sheepie to really care what is being done to them. >>

The gov has already thought a lot about this, where do you think this leads to?

Last, think about MF Global, people that had serialized bars in their name lost them; so much for the rule of law.

pf70collector · January 22, 2012 3:26AM

One official explained that President Obama does believe, however, that American citizens can be temporarily detained, and that the military has the right to capture and hold any citizen who is engaged in conflict against the United States.

This is law has nothing to do with a terrorist. "Any citizen in conflict with the U.S" You have to define what represents the U.S. The citizens or their representatives or even the president. Does conflict also mean any protestor? Seems they now have the means to even detain protestors, further distorting the constitution.

EagleEye · January 22, 2012 8:40AM

You should relabel this thread to "who can tell the biggest lie and get others to agree to it?"

For example, the detention thing was a Republican add-on to the Defense bill and Obama issued a signing statement saying he wouldn't implement it.

You can have you own opinion, but not your own facts. I'll stop there, but nearly every post is of the same caliber of truth.

Weg · January 22, 2012 12:31PM

<< "who can tell the biggest lie and get others to agree to it?" >>

That's easy to answer, a politician. Please notice there was no mention of any particular political party untill the previous post.

Treasury dips into pension funds to avoid debt

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