Monday, February 1, 2010

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: 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:, and include RIN 1210-AB33 in the subject line.


Anonymous said...

Thank you for keeping us posted. I would like to make my thoughts on the matter known during the comment period. When does this end? Any idea on the prcess/proceedure and how much time we have to react. I will close my retirement accounts now rather than be subjected to withdrawal confication later.

arevamirpal::laprimavera said...

Comment period is 90 days from the date this is posted on the Federal Register. The document is dated Jan 27, 2010. To comment by email or by snail mail,

. Include RIN 1210-AB33 in the subject line of the message.
• Mail
: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210, Attention: Lifetime Income RFI.

All submissions received must include the agency name and Regulation Identifier Number
(RIN) for this rulemaking.

Agency name is Department of Labor, and RIN number is 1545-BJ04. If you submit to DOL, it is supposed to be shared with Department of Treasury.

I don't like this at all. Just when my IRA recovered to pre-crash level, they want to stuff with government IOUs.

I don't know either whether this will need Congressional approval, or it can by done by executive order. If it's the latter...

Anonymous said...

Again the government is trying to push down the throat of the people a plan they will never use. Just like health care they have their own retirement plan, taken off the back of the working people, and will not even consider being a part of this.
We are headed down a road where the government will take 80% of everything we have and return 10% to you to survive on. But of course they can only take 80% from those who contribute to society by working hard to better themselves.

Anonymous said...

Actually, I haven't worked since 1996. I knew this world was going to crash after we went off the gold standard many, many decades ago.
Eventually the elites will steal everything from hard workers so I realized...why work hard. It makes no sense.
The government will eventually give big fat grants to care for the aging baby boomers that will be housed by the thousands in government funded senior care facilities.
There is no escaping reality and too many freedoms are gone already.

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