Obama, Dems Seek to End 401(k) Plans
By Mark Impomeni
Oct 24th 2008 9:00AM
Sen. Barack Obama's Democratic allies in Congress are looking into a radical new plan that would fundamentally change the way Americans save for retirement. House Democrats recently heard testimony on the idea and, under a potential Obama administration, would likely move to put it in place. Democrats want to seize the money that workers currently invest in their 401(k) plans and replace the popular retirement savings accounts with a one-size-fits-all government sponsored retirement account. Under the scheme, Americans would be forced to transfer all of their hard earned retirement savings from their 401(k) to the government.
The government would contribute $600 a year to fund each account and would pay a rate of return of around three percent in interest. The government would also mandate that each worker contribute 5% of their yearly salary to the accounts. Under current law, workers with 401(k) plans contribute to their retirement accounts and earn interest tax free. The Democrats' plan would end those tax breaks, amounting to as much as a 15% tax hike on each American worker.
Rep. Jim McDermott (D-WA) said recently that Democrats had better ideas for the $80 billion that Americans contribute to their 401(k) plans each year. "We have to start thinking about whether or not we want to continue to invest that $80 billion for a policy that's not doing what we say it should." Sen. Obama would likely sign on to the plan as president.
Obama, McDermott, and Congressional Democrats miss the point that under current law, Americans have control over their retirement savings, where and how it is invested, and when and how much they contribute. The idea to nationalize retirement savings is another example of Democrats' socialist proclivities. They want control of Americans' retirement to reside in Washington DC, not on Main St., all in the name of "retirement security."
BTW, here are the tables on how Americans are taxed right now. Basically, the top 50% already pay 96% of the taxes.