Saturday, September 05, 2009
Obama's Retirement Reform Proposal
If Obama and his Administration gave a good god-damn about retirement security, they could start by reigning in obscene spending so we won't have to inflate American's retirement savings into oblivion, or tax the bejeezus out of distributions from 401(k)s, 403(b)s IRAs, SEPs, and annuities, in order to have a prayer of paying off our debt.
Instead, our Dear Spender proposes replacing cash refunds with taking on even MORE government debt.
If he really wanted to help people, he would push for waiving the 10% withdrawal penalty on 401ks and IRAs for people under 59 1/2 who are unemployed, or for the purpose of starting a new business (and hiring!). All that's needed is to expand the definition of qualified hardship withdrawals to include unemployment income.
But he won't.
Instead, he screws around the edges. Unused vacation pay?? Sounds like an idea only someone who's had his head so far up the Union's ass for years would love.
He wants to put long term retirement savings in government savings bonds, of all places? With interest rates at historic lows???? If he were in private practice, he'd get sued nine ways from Sunday.
And then, Dear Leader wants to send the paper savings bonds directly to the workers? So they can stuff them in a drawer somewhere? No third party administration? No transfer agent to keep track of beneficiaries? This sounds like a banana republic plan.
I'm all for having a default 'opt-in' for retirement plan participation. That's been a good idea for a long time - though there are a lot of details to work out, including figuring out a reasonable 'safe-harbor' solution for plan sponsors who don't want liability for taking either too much risk or too little risk with the money. There are ERISA headaches when a plan sponsor's executive class gets a 6% return over years because of a reasonable allocation to equities, while the worker bees get 2% returns because the worker bee assets were deposited into money markets. Lots of companies have declined to offer retirement plans precisely BECAUSE of this kind of ERISA liability.
(Incidentally, an automatic opt-in provision helps executives, who can't max out their own plans, under "top hat" rules, unless they meet participation requirements among the rank and file.)
The plan to issue savings bonds instead of tax refunds? It's a massive screwing of the working and middle class. With interest rates low, massive spending and inflationary expectations, such a deal is a very bad one for workers (and a great one for the IRS!).
It's also a massive redirection of spending power from main street USA to K Street, Washington. All it does is ensure government bureaucrats once again take the first cut of any tax refund checks.
(What gets me is that libtards will, if pressed, and in the same breath, argue at once that we need increased participation in 401(k)s but we shouldn't partially privatize Social Security because equities are too risky to rely on for retirement savings.)
All in all, I'm thoroughly unimpressed with Obama's proposal.
Why the Hell is he wasting bandwidth on this garbage, anyway? He ought to be pressing the case for his abortion of a health care reform package, or mustering up public sentiment to fight and win in Afghanistan. (That's the one he thought was important, remember?)
Instead, he's blowing political capital on these distractions, impaling himself against the Republican pikes over health care reform, and letting the Afghanistan war effort shrivel and die for lack of rhetorical oxygen and leadership from the President.
The likely result is that Obama will fail at all three initiatives.
I want him to fail on health care reform. Utterly. I do NOT want him to fail to win in Afghanistan.
Splash, out
Jason
Instead, our Dear Spender proposes replacing cash refunds with taking on even MORE government debt.
If he really wanted to help people, he would push for waiving the 10% withdrawal penalty on 401ks and IRAs for people under 59 1/2 who are unemployed, or for the purpose of starting a new business (and hiring!). All that's needed is to expand the definition of qualified hardship withdrawals to include unemployment income.
But he won't.
Instead, he screws around the edges. Unused vacation pay?? Sounds like an idea only someone who's had his head so far up the Union's ass for years would love.
He wants to put long term retirement savings in government savings bonds, of all places? With interest rates at historic lows???? If he were in private practice, he'd get sued nine ways from Sunday.
And then, Dear Leader wants to send the paper savings bonds directly to the workers? So they can stuff them in a drawer somewhere? No third party administration? No transfer agent to keep track of beneficiaries? This sounds like a banana republic plan.
I'm all for having a default 'opt-in' for retirement plan participation. That's been a good idea for a long time - though there are a lot of details to work out, including figuring out a reasonable 'safe-harbor' solution for plan sponsors who don't want liability for taking either too much risk or too little risk with the money. There are ERISA headaches when a plan sponsor's executive class gets a 6% return over years because of a reasonable allocation to equities, while the worker bees get 2% returns because the worker bee assets were deposited into money markets. Lots of companies have declined to offer retirement plans precisely BECAUSE of this kind of ERISA liability.
(Incidentally, an automatic opt-in provision helps executives, who can't max out their own plans, under "top hat" rules, unless they meet participation requirements among the rank and file.)
The plan to issue savings bonds instead of tax refunds? It's a massive screwing of the working and middle class. With interest rates low, massive spending and inflationary expectations, such a deal is a very bad one for workers (and a great one for the IRS!).
It's also a massive redirection of spending power from main street USA to K Street, Washington. All it does is ensure government bureaucrats once again take the first cut of any tax refund checks.
(What gets me is that libtards will, if pressed, and in the same breath, argue at once that we need increased participation in 401(k)s but we shouldn't partially privatize Social Security because equities are too risky to rely on for retirement savings.)
All in all, I'm thoroughly unimpressed with Obama's proposal.
Why the Hell is he wasting bandwidth on this garbage, anyway? He ought to be pressing the case for his abortion of a health care reform package, or mustering up public sentiment to fight and win in Afghanistan. (That's the one he thought was important, remember?)
Instead, he's blowing political capital on these distractions, impaling himself against the Republican pikes over health care reform, and letting the Afghanistan war effort shrivel and die for lack of rhetorical oxygen and leadership from the President.
The likely result is that Obama will fail at all three initiatives.
I want him to fail on health care reform. Utterly. I do NOT want him to fail to win in Afghanistan.
Splash, out
Jason
Labels: Afghanistan, finance, investing, Obama, Politics, retirement
Comments:
Well... really, if you don't want to risk your money.. come on.. the annuities is the best option for you...
Post a Comment
# posted by 
: 3:41 PM
: 3:41 PM
