There are huge amounts of money in these plans, which makes it very tempting for government to try and get at it. The government may, or may not, tax the money, but there are other ways they may get at the funds.
An Investment Company Institute study published this month found that U.S. retirement assets totaled $18.5 trillion at the end of the second quarter 2012, of which 3.5 trillion was in IRAs and $5.1 trillion was in 401(k) plans.
World News Daily reports on how the government may try to expand the IRA program and then get its hands on that money:
Recent evidence suggests government officials continue to eye the multi-trillion dollar private retirement savings market, including IRAs and 401(k) plans, eyeing the opportunity to redistribute private retirement savings to less affluent Americans and to force the retirement savings out of the private market and into government-controlled programs investing in government-issued debt...Since 2010, the U.S. Treasury Department and the Department of Labor have been holding combined hearings on various plans designed to introduce government-mandated retirement plans and investment options, including government annuities invested primarily in U.S. Treasury debt, into the private retirement savings market.
“This hearing was set up to explore why Americans are not saving as much for their retirement as they could,” explained National Seniors Council National Director Robert Crone, describing a recent Treasury-Labor hearing held in the Labor Department’s main auditorium.
“However it is clear that his is just the first step toward a government takeover. It feels like the beginning of the debate over health care and we all know how that ended up.”
With the issuance of the White House 256-page Budget Proposal for Fiscal Year 2013, the Obama administration endorsed “Automatic IRAs,” a plan introduced into Congress in 2010 by Sens. John Kerry, D-Mass, and Jeff Bingaman, D-N.M., in which private companies would be automatically enrolled into government-mandated IRAs, forcing those businesses to contribute on behalf of their employees a “default amount” equal to 3 percent of an employees pay, unless an employee specifically opts out of the plan.
The FY 2013 Budget proposal notes that currently 78 million working Americans, roughly half of the work force, lack employer-based retirement plans...
The Service Employee International Union, or SEIU, a key labor union ally of the Obama administration, has mounted an effort to create government-mandated worker retirement accounts as an entitlement program, with the possibility that a portion of all private retirement funds could be forced into U.S. Treasury debt.
Branding the program “Retirement USA,” the SEIU has joined with the AFL-CIO, the Economic Policy Institute, a Washington-based economic left-leaning think tank that receives substantial labor funding, and two other left-leaning interest groups, the Pension Rights Center and the National Committee to Preserve Social Security.
The Retirement USA idea is promote the concept that all workers in the U.S. have a right to a government retirement account that would fund a secure retirement with adequate dollars, in addition to Social Security and private ERISA-retirement workplace retirement programs such as 401(k) programs.
“Our goal is to involve all workers and all employees in a government-mandated retirement program, with the government putting up the difference for lower paid employees,” Nancy Hwa, a spokeswoman for the participating Pension Rights Center, told WND in 2010.
Put simply, the Retirement USA government-mandated workplace retirement account would require by law employers and employees to contribute to a retirement account for every employee and demand that a portion of that contribution go into a federal-government created annuity that would be funded by purchasing Treasury debt...
Under the guise of making workplace retirement savings accounts available to all Americans and insuring that existing retirement savings accounts pay lifetime income, the SEIU-led Retirement USA effort is quietly exploring strategies that would create “Universal IRAs” or “Guaranteed Retirement Accounts” for all workers.
Following lead of Argentina
Writing in the London Telegraph in October 2008, business and economics editor Ambrose Evans-Pritchard warned that G7 nations, including the United States, may begin following the path of Argentina in forcing privately managed pension funds to be invested in government-issued debt.
Bottom line: The government may not tax your money, it may instead force you to buy Treasury securities with your money. For the government, it is pretty much the same thing as a tax. It results in your money ending up in government coffers to spend at will by government. In turn you will receive government IOU's, i.e., Treasury securities, which may be among the worst investments in the years ahead as interest rates go up and price inflation eats away at the buying power of those IOUs.
Link:
http://www.economicpolicyjournal.com/2012/12/how-government-is-coming-after-your-ira.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+economicpolicyjournal%2FYZSb+%28EconomicPolicyJournal.com%29
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