[galaktiusman]

Uncle Sam, in a desperate attempt to fix its $16 trillion-plus deficit, is leering over Americans’ retirement nest egg as its new bailout fund.

Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.

A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.

Besides 401(k)s, other possibilities include the mortgage-interest deduction on second homes, as well as benefits from employer-provided health insurance, which are untaxed now.

Under current 401(k) rules, total employee/employer contributions can’t exceed $50,000. In the proposed rule change, employer/employee contributions would be limited to 20 percent of the employee’s compensation, with a maximum of $20,000, the so-called 20/20 proposal.

Another proposal being discussed in Congress says all tax deductions on 401(k)s and IRAs to be replaced with an 18 percent credit. The credit, according to a proposal that has been endorsed by economist William Gale, would be placed directly in a person’s retirement account.

“Unlike the current system,” Gale told Congress, “workers’ and firms’ contributions to employer-based 401(k) accounts would no longer be excluded from income and would be subject to taxation, contributions to IRAs would no longer be tax-deductible and any contributions to a 401(k) plan would be treated as taxable income.”

In other words, the employee and employer would no longer get a deduction under the Gale plan, they would qualify for a credit. And the credit would “increase [government] revenues by about $458 billion,” Gale says.

Last week a group of retirement industry experts went to Capitol Hill to criticize these proposed changes in retirement-plan rules. “These changes could have unintended consequences,” warns Lynn Dudley of the American Benefits Council (ABC).

Testifying before the House Ways and Means Committee about the proposals, Randolf Hardock, of ABC’s board of directors, said, “[The idea] could seriously undermine the retirement savings system.”

Jack VanDerhei, research director of Employee Benefit Research Institute (EBRI), believes either of the two proposed 401(k) changes under review would have a “catastrophic” effect on the current retirement saving system.

The 20/20 plan provisions curtailing non-taxable contributions would freeze out many higher-paid employees from signing up for a 401(k), which could lead some companies, according to critics, to question if plans would still be worth offering employees.

Reducing retirement-plan contributions for those at the higher end of the wage scale will inevitably have a bad effect on those in the middle and at the bottom, ABC’s Dudley says

http://www.nypost.com/p/news/busines...#ixzz1smCBeBwu

[occallExtet]

the first thing that will be done if obama wins re-election is to tax private health care plan benefits as income. my wife's company has already begun prepping all of the hr people for it. they want you in the government plan, and this is a way they're going to do it.

[ROYMANgo]

You have to be crazy to lock up any money in these government-recognized "retirement programs" anyway. I am slowly taking mine OUT. Does anyone really believe the government won't seize it to prevent a collapse? The trial balloons for "converting" them to "safe" Treasury bonds have already been floated. The "money", and your "possession" of it, exists at the pleasure of the government, just like you.

[njfeedd3w]

The first thing that the chocolate fairy does upon re-(s)election is confiscation of these retirement plans. They're not gonna just tax them they're gonna take them.

[Menierofe]

I have been anticipating this for several years. Last year I pulled all my money out of my IRA, and a week ago I made the final installment on my taxes.

I am getting worried now that they will go beyond the tax-deferred retirement plans and start confiscating ALL other forms of private savings. This is a good reason to own physical PMs, and to hide them where the goons will never find them.

Any government that thinks it can cure the problem of too much debt by borrowing more money knows no limits. Best to safeguard what you own from the criminals in charge.


Hatha

[clapsoewmred]

government size or spending reductions not possible...

[Unlopssesuj]

this was talk about 5 or 6 years ago on the old gim . time will tell if they do this . i would say it will happen . they need more paper to pay the load of worker they keep getting to watch us all

[Vkowefek]

Argentina, here we come. Fasten your seatbelts folks, the ride is going to get a little bumpy from here.

[Rategbee]

The US govt has already raided federal pensions. What's to stop them from raiding 401k funds?

Portugal has already done this. More to follow.

If not for the printing press, this woulda been done long ago.

[Saad Khan]

They can and they will........... at the time and hour of their choosing.


Got Silver