Ed from OC

401k Nationalization

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The odds of a nationalization of 401(k) retirement accounts just went up.

I'm not sure if this will actually go through. It's one thing to target a small portion of the population and loot them for the sake of a net gain of votes. But this would actually loot money from such a large group that I can't see it making any sense on the typical politician's own terms. Yet it keeps coming back, getting mentioned yet again in the press.

Obviously, if the likelihood is very high, empty your accounts now before they do it for you. Even if you pay taxes and early-withdrawal penalties, at least you'd keep a lot of it. Given the cost of cashing out, it pays to be very certain that nationalization is coming before cashing out. As we saw with health care, financial companies, and GM bond holders, this Congress and administration care nothing for private property. So they would have no qualms about taking the funds; only if they could get away with it.

Thoughts?

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I did cash out before moving to Sydney in mid-2008, and against the advice of my sister, who is a financial planner. She insisted that I would 'probably' move back to the US at some point and then I would have all that money which would have accumulated interest over the years.

Well, as it happened I cashed out months before the financial crisis and what I paid in taxes PALED in comparison to the value lost to my 401(k) had I left it alone. Not only that, but it enabled me to establish myself down here quicker than if I hadn't cashed out.

I'm sure all of you have seen that for the first time in I don't know how long, the Aussie dollar is about to reach parity with the US dollar. My sister has since said I was wise to take the money and run. Oh, and I am staying permanently in Australia. :D

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Obama doesn't have the backing that FDR had, nor to mention the situation of Congress. I don't see how anything like that could pass. It's a very scary thought.

Interestingly, I have wondered why they don't remove the penalty. They want to "stimulate" the economy (which as we here know is a null concept), and I'm sure a lot of people would like to spend their 401(k) money. Such a move would certainly "inject liquidities into the system", and I think it would be popular.

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Nationalizing 401(k)s has been floated many times over the last couple of years. It is a radical threat; much like talk of re-instating the draft, it is meant to send a message and re-frame the debate more than having much chance of passing.

But, when the time comes to decide whether to contribute more to your 401(k)... do you want to take the chance? And look at how mere talk of this can negatively impact people's choices.

A boss I had once suggested that I contribute as much as legally allowed to a 401(k) to maximize my tax savings. Imagine if the account of somebody who had done that were nationalized, and treated no differently than somebody who had contributed, say, a token 3%?

Seizing 401(k)s is an act of naked dictatorship and far more monstrous than a typical tax raise or increase in regulation, which, unfair as they are, can at least be planned for. For that reason I don't think it could pass, and I think people would rush to declare it unconstitutional if talk of this became more prominent.

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I actually think civil violence would ensue.

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The reasons given for why it won't pass -- that it's unpopular, that Obama doesn't have the support for it -- applied to his health care effort as well. It didn't stop that, so why would it stop this?

BTW, the article notes this is discussion going on in the Senate. I don't know that Obama is leading the charge on this one.

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The reasons given for why it won't pass -- that it's unpopular, that Obama doesn't have the support for it -- applied to his health care effort as well. It didn't stop that, so why would it stop this?

BTW, the article notes this is discussion going on in the Senate. I don't know that Obama is leading the charge on this one.

Good point. I also thought it was very odd that the Finance Bill got little to no media attention. A complete overhaul of Wall Street and giant bureaucratic agency and no one is that interested apparently.

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The reasons given for why it won't pass -- that it's unpopular, that Obama doesn't have the support for it -- applied to his health care effort as well. It didn't stop that, so why would it stop this?

BTW, the article notes this is discussion going on in the Senate. I don't know that Obama is leading the charge on this one.

Good point. I also thought it was very odd that the Finance Bill got little to no media attention. A complete overhaul of Wall Street and giant bureaucratic agency and no one is that interested apparently.

By analogy, if half the town is on fire and you're rushing to put it out, how much attention gets paid to the guy running around torching new buildings? Things are very very bad right now in the US economy directly as a result of a far left Congress and Obama.

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I had an interesting conversation with a very financially astute friend who pointed out that if they do (God forbid) nationalize 401ks, there would be no benefit to removing one's money in advance because they could just look at the records and send you a bill for what they would otherwise have confiscated. So I oppose the nationalization and will fight it where I can, but I won't be withdrawing my money. I pass this note along in case others may think to do that.

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I had an interesting conversation with a very financially astute friend who pointed out that if they do (God forbid) nationalize 401ks, there would be no benefit to removing one's money in advance because they could just look at the records and send you a bill for what they would otherwise have confiscated. So I oppose the nationalization and will fight it where I can, but I won't be withdrawing my money. I pass this note along in case others may think to do that.

I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands. It does make sense for a "very financially astute" person to recommend you keep a 401(k) as they cannot make money on a non-existent account, but that does not make their advice moral.

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I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands.

Yes, because we all know how good the government is at keeping their word and holding fast to a legal contract. I say that whether or not the government just sends you a bill if you withdraw before they confiscate shouldn't be a concern. After all, they'll only take from you exactly what they would have taken anyway.

I don't think such a thing would pass though, because when the Dems rammed through the health care bill they could at least pretend that the good of others was being served by it somehow. They can't really claim that this is serving anybody's good but theirs, and it wouldn't take that many Dems to help block it.

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I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands.

Yes, because we all know how good the government is at keeping their word and holding fast to a legal contract. I say that whether or not the government just sends you a bill if you withdraw before they confiscate shouldn't be a concern. After all, they'll only take from you exactly what they would have taken anyway.

I don't think such a thing would pass though, because when the Dems rammed through the health care bill they could at least pretend that the good of others was being served by it somehow. They can't really claim that this is serving anybody's good but theirs, and it wouldn't take that many Dems to help block it.

I do not understand what it is you are stating. I am not saying that our government officials as a whole are morally sound nor that they will not figure out how to make the moral look like a thief such as they do with "tax-evaders." But, I am still unwilling to give a thief my money without a fight, whether it is a thief off the street or the ones in Washington.

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I had an interesting conversation with a very financially astute friend who pointed out that if they do (God forbid) nationalize 401ks, there would be no benefit to removing one's money in advance because they could just look at the records and send you a bill for what they would otherwise have confiscated. So I oppose the nationalization and will fight it where I can, but I won't be withdrawing my money. I pass this note along in case others may think to do that.

I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands. It does make sense for a "very financially astute" person to recommend you keep a 401(k) as they cannot make money on a non-existent account, but that does not make their advice moral.

Ray, please do not misread what I said, or read implications that aren't there. The person I talked with is a good friend who is very successful and very knowledgeable about finance and markets; he has no commercial or financial interest in where I put my money. He and I have had several conversations about economics and investments over the years. So please don't attack the character of someone whose identity and credentials you don't know.

I was trying to get across many points briefly so I didn't linger on this one. The point is that tax avoidance, not just tax evasion, is illegal. If the IRS sees you taking actions to avoid taxes, outside of prescribed and condoned methods, they can, do, and likely will take legal action to obtain the missing taxes, plus levy fines. It should be no surprise that a government can arbitrarily ignore property rights (eminent domain cases; seizing GM, Chrysler at the expense of bond holders; voiding mortgage and foreclosure processes and contracts by whim; etc.) can decide when they see fit to seize a nice, big cash cow sitting out there (the huge money in 401k accounts) and use it to pay out the overdrawn labor union pensions.

This administration is far more leftist than any in my lifetime. It scares me how little they value the rule of law or property rights. Previous presidents violated our rights on occasion, but this guy just doesn't care at all about even the appearance of protecting them. He has no fear at all about going too far.

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I had an interesting conversation with a very financially astute friend who pointed out that if they do (God forbid) nationalize 401ks, there would be no benefit to removing one's money in advance because they could just look at the records and send you a bill for what they would otherwise have confiscated. So I oppose the nationalization and will fight it where I can, but I won't be withdrawing my money. I pass this note along in case others may think to do that.

I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands. It does make sense for a "very financially astute" person to recommend you keep a 401(k) as they cannot make money on a non-existent account, but that does not make their advice moral.

Ray, please do not misread what I said, or read implications that aren't there. The person I talked with is a good friend who is very successful and very knowledgeable about finance and markets; he has no commercial or financial interest in where I put my money. He and I have had several conversations about economics and investments over the years. So please don't attack the character of someone whose identity and credentials you don't know.

I was trying to get across many points briefly so I didn't linger on this one. The point is that tax avoidance, not just tax evasion, is illegal. If the IRS sees you taking actions to avoid taxes, outside of prescribed and condoned methods, they can, do, and likely will take legal action to obtain the missing taxes, plus levy fines. It should be no surprise that a government can arbitrarily ignore property rights (eminent domain cases; seizing GM, Chrysler at the expense of bond holders; voiding mortgage and foreclosure processes and contracts by whim; etc.) can decide when they see fit to seize a nice, big cash cow sitting out there (the huge money in 401k accounts) and use it to pay out the overdrawn labor union pensions.

This administration is far more leftist than any in my lifetime. It scares me how little they value the rule of law or property rights. Previous presidents violated our rights on occasion, but this guy just doesn't care at all about even the appearance of protecting them. He has no fear at all about going too far.

Ed, it was not my intention to specifically attack your friend's character. But I worked in the investment field for a short time and still today know many financial investors that are totally lacking in "business morals." That does not mean that I do not think there are good people in the field as I do. But from what I have seen in my dealings within this field, from the new ones all the way up, for the most part they do not impress me.

I would add that if a financial investor is worth keeping one's money with them, that they should have a good understanding of the tax laws, such as an accountant or a lawyer, but I have not meet many of these type of people in either field.

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Ed, I forgot to add a further comment about your last paragraph. If you think that the administration is so bad and unlawful, why would you want to keep feeding them through your productivity of any sort?

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I am not emptying my 401k, and I don't think the government is in position to pass a law allowing confiscation. If it were, it could just as well confiscate other investment vehicles, any "excess" jewelry & luxury goods you have, etc. It would be Bolshevism. It would call for revolution.

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I am not emptying my 401k, and I don't think the government is in position to pass a law allowing confiscation. If it were, it could just as well confiscate other investment vehicles, any "excess" jewelry & luxury goods you have, etc. It would be Bolshevism. It would call for revolution.

I would like to remind you that the US government has done this before, when Roosevelt outlawed gold ownership on April 5, 1933. Didn't see revolution then, why would there be any now?

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I am not emptying my 401k, and I don't think the government is in position to pass a law allowing confiscation. If it were, it could just as well confiscate other investment vehicles, any "excess" jewelry & luxury goods you have, etc. It would be Bolshevism. It would call for revolution.

Is there any difference between this and the ~30-60% they grab right out of your income?

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I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands.

Yes, because we all know how good the government is at keeping their word and holding fast to a legal contract. I say that whether or not the government just sends you a bill if you withdraw before they confiscate shouldn't be a concern. After all, they'll only take from you exactly what they would have taken anyway.

I don't think such a thing would pass though, because when the Dems rammed through the health care bill they could at least pretend that the good of others was being served by it somehow. They can't really claim that this is serving anybody's good but theirs, and it wouldn't take that many Dems to help block it.

I do not understand what it is you are stating. I am not saying that our government officials as a whole are morally sound nor that they will not figure out how to make the moral look like a thief such as they do with "tax-evaders." But, I am still unwilling to give a thief my money without a fight, whether it is a thief off the street or the ones in Washington.

I was saying that even if they don't write it into the original bill that they can confiscate your pension even if you take it out of the system before they nationalize it, I don't think you can really count on that to keep your pension safe. The Rule of Law is no protection when the rules can change at any time, based on expediency and the spur of the moment.

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I am not emptying my 401k, and I don't think the government is in position to pass a law allowing confiscation. If it were, it could just as well confiscate other investment vehicles, any "excess" jewelry & luxury goods you have, etc. It would be Bolshevism. It would call for revolution.

Is there any difference between this and the ~30-60% they grab right out of your income?

Yes. 30%-60% is a rate, vs. a grab of a fixed, unbounded set of already earned property. One can plan for taxes; one cannot plan for an arbitrarily large fixed confiscation.

The tax rate we currently have came incrementally. It is very unlikely for a sudden 401(k) nationalization to be passed.

Politicians are still bound by political considerations and in most circumstances, confiscating 401(k)s would be impossible. Look at the backlash they received for Obamacare-lite. (And the backlash they received for Obamacare, via the Masachusetts special election, made it impossible to pass Obamacare-full.) They were unable to pass cap and trade, and card check, because of politics. They threw their political capital behind Obamacare and spent a great deal of it.

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I am not emptying my 401k, and I don't think the government is in position to pass a law allowing confiscation. If it were, it could just as well confiscate other investment vehicles, any "excess" jewelry & luxury goods you have, etc. It would be Bolshevism. It would call for revolution.

Is there any difference between this and the ~30-60% they grab right out of your income?

Yes. 30%-60% is a rate, vs. a grab of a fixed, unbounded set of already earned property. One can plan for taxes; one cannot plan for an arbitrarily large fixed confiscation.

The tax rate we currently have came incrementally. It is very unlikely for a sudden 401(k) nationalization to be passed.

Politicians are still bound by political considerations and in most circumstances, confiscating 401(k)s would be impossible. Look at the backlash they received for Obamacare-lite. (And the backlash they received for Obamacare, via the Masachusetts special election, made it impossible to pass Obamacare-full.) They were unable to pass cap and trade, and card check, because of politics. They threw their political capital behind Obamacare and spent a great deal of it.

Sure, just like it was unlikely to have government medical coverage. Just like it was unlikely to have a an IRS, a National Treasury, a Federal Reserve, an Eviromental Protection Agency, a Federal Communications Commission, and any other government entitiy that does not protect rights. Obama is making huge mistakes and should have learned from the Clintons' attempts at nationalizing health-care during their first presidiency. Almost every major aspect of Bill and Hilary's plans made it into law by 1996 which was originally unapproved in 1993 when they tried to get it approved as one whole bill.

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I disagree, it would have to be written into the bill/law that the government could do so. As of right now the government has not done so, so it seems to make perfect sense to keep it out of their hands.

Yes, because we all know how good the government is at keeping their word and holding fast to a legal contract. I say that whether or not the government just sends you a bill if you withdraw before they confiscate shouldn't be a concern. After all, they'll only take from you exactly what they would have taken anyway.

I don't think such a thing would pass though, because when the Dems rammed through the health care bill they could at least pretend that the good of others was being served by it somehow. They can't really claim that this is serving anybody's good but theirs, and it wouldn't take that many Dems to help block it.

I do not understand what it is you are stating. I am not saying that our government officials as a whole are morally sound nor that they will not figure out how to make the moral look like a thief such as they do with "tax-evaders." But, I am still unwilling to give a thief my money without a fight, whether it is a thief off the street or the ones in Washington.

I was saying that even if they don't write it into the original bill that they can confiscate your pension even if you take it out of the system before they nationalize it, I don't think you can really count on that to keep your pension safe. The Rule of Law is no protection when the rules can change at any time, based on expediency and the spur of the moment.

And as I have already mentioned to Ed, if you think this countries' government is so bad that it will just stomp all over you (and many others) why are you supporting them with your efforts/your production? Why do you not take your income and investments to a place where your rights, productivity, investments and profits are better protected? Or are we (Americans) going to allow them to fully chain us before any fight is offered?

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Yes. 30%-60% is a rate, vs. a grab of a fixed, unbounded set of already earned property. One can plan for taxes; one cannot plan for an arbitrarily large fixed confiscation.

The tax rate we currently have came incrementally. It is very unlikely for a sudden 401(k) nationalization to be passed.

Politicians are still bound by political considerations and in most circumstances, confiscating 401(k)s would be impossible. Look at the backlash they received for Obamacare-lite. (And the backlash they received for Obamacare, via the Masachusetts special election, made it impossible to pass Obamacare-full.) They were unable to pass cap and trade, and card check, because of politics. They threw their political capital behind Obamacare and spent a great deal of it.

Sure, just like it was unlikely to have government medical coverage. Just like it was unlikely to have a an IRS, a National Treasury, a Federal Reserve, an Eviromental Protection Agency, a Federal Communications Commission, and any other government entitiy that does not protect rights. Obama is making huge mistakes and should have learned from the Clintons' attempts at nationalizing health-care during their first presidiency. Almost every major aspect of Bill and Hilary's plans made it into law by 1996 which was originally unapproved in 1993 when they tried to get it approved as one whole bill.

Ray, I would never have claimed that it was equally "unlikely" to have government medical coverage, as 401(k) nationalization. In fact, if you had asked me on the day Obama was elected if a healthcare takeover (even more than was actually passed) was likely, I would have said yes! I was bracing for cap and trade, and card check, and expected early on that they would all pass. I was pleasantly surprised that politics stopped some of them. If you are claiming that in 2008 any reasonable observer could have said that the two were equally likely, then that is absurd.

Most of the other examples you cite happened decades ago, long before I was born, and I would have to start a research project to study how "likely" they seemed in the buildup. Are you claiming that each was as much a surprise, and upset, at the time, as if 401(k) nationalization were to occur in the near future?

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Ed, I forgot to add a further comment about your last paragraph. If you think that the administration is so bad and unlawful, why would you want to keep feeding them through your productivity of any sort?
And as I have already mentioned to Ed, if you think this countries' government is so bad that it will just stomp all over you (and many others) why are you supporting them with your efforts/your production? Why do you not take your income and investments to a place where your rights, productivity, investments and profits are better protected? Or are we (Americans) going to allow them to fully chain us before any fight is offered?

Since I also do productive work which is taxed, and seek to increase my income (and therefore amount taxed), I'll answer.

Because we have the moral right to work for our own benefit even if some is taken at the point of a gun? Because working does not make us morally responsible for our attackers' actions? Since when is it morally incumbent on the victim to move? Oh, and please name this place which is accepting immigrants where our rights are protected.

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Ed, I forgot to add a further comment about your last paragraph. If you think that the administration is so bad and unlawful, why would you want to keep feeding them through your productivity of any sort?
And as I have already mentioned to Ed, if you think this countries' government is so bad that it will just stomp all over you (and many others) why are you supporting them with your efforts/your production? Why do you not take your income and investments to a place where your rights, productivity, investments and profits are better protected? Or are we (Americans) going to allow them to fully chain us before any fight is offered?

Since I also do productive work which is taxed, and seek to increase my income (and therefore amount taxed), I'll answer.

Because we have the moral right to work for our own benefit even if some is taken at the point of a gun? Because working does not make us morally responsible for our attackers' actions? Since when is it morally incumbent on the victim to move? Oh, and please name this place which is accepting immigrants where our rights are protected.

I am not offering to move, I offering that you fight, in any form possible to you. My main point is that the totality of what has been lumped on Americans today is massive compared to 200 years ago and still very little fighting is going on (and I do not mean a physical battle). Without principles to guide an individuals choices and actions most keep getting lead to further and further enslavement with no or very little dispute. Well, when are American's, such as yourself, going to grow tired of it? Because, "it can't happen here," is a fallacy. The Germans stated the same thing, the Russians stated the same thing, but it did happen and it can happen again.

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