Free Markets, Free People

All your retirement money are belong to us

How’s that 401(k) working out for you?  Well, if the Obama administration has its way, you won’t have to worry about that any more.

Apparently, you’re too stupid and lazy to be trusted with your own retirement planning. So, what you need is for the government to “urge” you to convert your 402(k) plan to a government annuity.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

TaxProf has a roundup of some useful links concerning this, but here’s the key takeaway:

There literally isn’t enough money in the world to float the T-notes the Treasury must issue in order to prop up our unsustainable spending path.  There are, however, about $3.6 trillion in funds just sitting in 401(k) accounts.  If the government can urge–or force–you to convert your 401(k) into T-note funded annuities, the Treasury can continue to issue those notes to float the government’s deficit.  Essentially, you’ll be converting your retirement funds into an IOU from the government…just like your social security account has already done.

This will allow the Treasury to keep borrowing money–from your retirement–in order to keep issuing more debt that they may or may not be able to pay back to you

funds intu The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
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19 Responses to All your retirement money are belong to us

  • Maybe its not black and white but every investment advice show I’ve listened to where I believe the person to be impartial and honest advise to stay away from annuities in nearly all cases.  You’re setting yourself up to be screwed by inflation for one thing.
     
    Something similar may be going on with life insurance, too.  My company switch insurers and I believe annuity was in there somewhere.  I need to go sign up somewhere and I’ll look into it then, but might explain why the life insurance change didn’t pass the smell test.

  • I’m wondering what this does to those who hold onto 401Ks, if the government is successful at getting a substantial percentage of people to convert. It would mean less money available to invest in stocks, so that might drive the market down. If that’s a risk, then it says a lot about how desperate Obama’s people are.

    I suppose anticipated hyperinflation could keep the price of stocks (backed by tangible assets) high. If the sentence beginning “There literally isn’t enough money in the world …” is true, hyperinflation is one of the exit conditions from the strain on the system. 

    What a mess…

    • Hyper inflation hurts stocks too, but they eventually rebound.
       
      The problem is that more people who are convinced to switch to annuities, the more money gets diverted from the stock market and the more it may be hurt.  Even if the amount is small 401(k) contributions happen rain or shine and so a lot of down days are nudged up because of it.  So imho, the market would at least become more volatile if 401(k)’s stopped contributing.

    • if the government is successful at getting a substantial percentage of people to convert.
      That new “Consumer Protection Agency” that Obama and the Hill are pushing along should be the first to tell us that these financial instruments are probably unsound, but they won’t.

  • They are junkies and we are the enablers.  It’s way past time for an intervention.

    Or tar and feathers.

  • They will take my 401(k) money out of my cold dead hands

    • Ditto!  When the government comes to take MY money, that’s when the new revolution starts.  The government has ZERO claim on MY money according to the Constitution under which I was born and will “uphold and defend from enemies foreign and DOMESTIC” to my last breath.  The democrat socialists have no idea the firestorm that will come with this kind of move.
      GLOD (Give Liberty Or Death)

  • I can’t imagine many people voluntarily converting but  I foresee the government  forcing investors to do so. There’s nothing we own that the Obama government won’t take away (if we let them).  

  • They would have to make another exemption for unions if they tried to push this idea.

  • “The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams”

    Here’s my comment: Go f**k yourselves. And drop dead to boot.

    I will pull out every single cent from my accounts and put it in my mattress before I follow this scheme

    • make sure its in gold and not dollars…pretty soon the only way to get electronics will be gold paid to the Chinese

  • This would probably be one of the reasons I’d arm myself and get outwardly agitated.

  • Years ago I wondered how long it would take Congress to see all that capital sitting there
    “unattended” when they told us it wouldn’t be taxed or screwed with.  Heh, took about as long as I expected. 

  • I read the Business Week article, and nowhere did I see a mention of government securities or annuities. I think this is  speculation based on someone’s interpretation of someone else’s comments.  It gets the adrenalin going in the morning, but where is the substance?

  • Notice the Business Week article plays along with blatant cherry picking: the end of 2007 was the high point of the stock market, and March 2009 was the dead bottom.  Never mind the stock market has recovered substantially since then.