Government's Plan for Your 401K and IRA

Here they come.

Zero Hedge has this post:

The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k) (2/1/2010)

"Yes, slowly but surely it is happening. In a federal notice filed earlier, the DOL and Treasury are soliciting a response on what has been on many investors' mind, namely the process of converting 401(k)s into annuity-like products. To wit:

The Department of Labor and the Department of the Treasury (the "Agencies") are currently reviewing the rules under the Employee Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code)to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants inemployer-sponsored retirement plans and in individual retirement arrangements
(IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement. The purpose of this request for information is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue.

"A cursory read of the document does not seem to ask about a flat out regulatory requirement for annuitization. We point your attention to item 13:

13. Should some form of lifetime income distribution option be required for defined contribution plans (in addition to money purchase pension plans)? If so,
should that option be the default distribution option, and should it apply to the entire account balance? To what extent would such a requirement encourage or discourage plan sponsorship?

"For readers who feel compelled to respond to this increasignly socialistic and ludicrous development, we suggest you voice your anger at the following address:

e-ORI@dol.gov. Include RIN 1210-AB33 in the subject line of the message"

This blog has reported on this issue since June last year, most recently in this post in January 2010. As I said in my previous posts on the matter, this idea has been put into words by non-governmental entities - Brooking Institution (Mark Iwry) and Heritage Foundation (David John).

After virtually running around on the Internet trying to locate the document that Zero Hedge is citing (Department of Labor has such a hostile site for people looking for information), I've finally found it. Here it is:

DEPARTMENT of LABOR Employee Benefits Security Administration What I'm wondering is this:

Is this a regulation that would require Congressional approval, or could it be signed into law by an executive order signed by the president?

If it is the latter, then we could wake up one day and find out that we would be required to liquidate at least portion of 401K/IRA and buy some special Treasury securities that we would have to keep for 10, 20, 30, 40 years.

Again, should you wish to protest (or support, I guess, if you are hard-core socialist), the email address is: e-ORI@dol.gov, and include RIN 1210-AB33 in the subject line.

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Government Is Ready to Raid Your 401K and IRA

Another chance for equality (i.e. making everybody poor) coming our way via the Obama government. They've been quietly at it since after the election in 2008, and now finally they are coming out and asking for public comment. That means it may become a bleak reality pretty soon.

What is it? Well, your government wants to stuff your 401K and IRA with what they call safe "annuities". Who would provide those "annuities"? Probably none other than the Treasury Department, in the form of special Treasury bonds. For your own good, so that your money is "secure".

Americans Oppose Proposals to Limit 401(k)s, ICI Says (Update1)
(Jeff Plungis, 1/8/2010 Bloomberg)

If you simply look at the title of this article, you wouldn't know what is really about. But here it is:

"Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing lifetime payments, according to an institute-funded report today. The Washington-based institute represents the mutual-fund industry. "

"Lawmakers have proposed changes, and the Obama administration will seek ways to promote conversion of 401(k) accounts after their average value fell in the past three years alongside a 46 percent drop in the Standard & Poor’s 500 Index."

"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 leading the effort."

Mark Iwry is from Brookings Institute who has been quietly working on the Obama administration's scheme of stuffing 401K and IRA with special Treasury bonds, and of mandating a national IRA for all employers. This blog has reported on this effective government takeover (albeit partially) of 401K and IRA in here and here.

Do not, for a moment, believe this is about the financial security for Americans. This is just another scam to siphon off wealth from the public. Remember the Treasury Department is fast running out of buyers for the government debt, willing or not. Therefore the government is turning to the least tapped source of buyers who have least say in just about everything: American public.

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