Barack Obama is the president-elect of our great nation. Now, the main question turns to, How will Obama's election affect me personally? Well, since you asked, the main target of the Obama administration may be your 401k, 403b, IRA, and other Retirement accounts.
2009 may well bring a concerted and all-out effort by the Obama administration and a Congress with well over ½ Democrats shooting to turn the generally Republican Investor Class into an endangered species by, among other tactics, raising investment taxes and ending the tax preferences for 401k, IRA, and other retirement accounts.
Labor Law
Here is the emerging battle plan for Obama's War against Tax-deferred Retirement Plans :
Investment Taxes are going to be raised.
Obama wants to raise capital gains taxes even though he has admitted that it might be bad for the economy and might actually decrease tax revenue to the government. For now, he is talking about raising the highest cap gains rate by one third to 20 percent, though earlier in the campaign, he floated pushing it as high as 28 percent, a near doubling. Now that he has been elected, he could revert to his early campaign promise of 28%. With the next administration facing a trillion dollar budget deficit, there will certainly be pressure to raise taxes to higher levels than now being suggested.
Annuities and Life Insurance had better watch out as well.
The governments mouth has been watering for a number of years, considering the windfall of cash that would come from taking away the tax deferred status of cash value insurance and annuities , and also the tax free life insurance benefit to beneficiaries. This could have a double jeopardy effect on estate taxes as well, since many affluent individuals rely on life insurance to cover the death tax.
401k, IRA, and other retirement plans may be a thing of the past.
Democrats in the House are now talking openly about the longtime liberal dream of repealing the tax advantages of putting money into a 401k plan or other tax-advantaged retirement account. Some think that since the savings rate is not going up for the investment of billion [in 401k tax breaks], they have to started to think about whether or not they want to continue to invest that billion for a policy that is not generating the revenue they say it should.
Teresa Ghilarducci, an economist at the New School for Social Research in New York, floated a radical alternative to 401k at a hearing held by Miller Oct. 7.
Under her plan, workers would receive a annual 0 tax refund if they set aside 5 percent of their pay into a retirement account run by the Social Security Administration, which would then invest globally in risky assets to seek high returns.
From that pool, workers would be paid a guaranteed 3 percent a year indexed to inflation.
The change would encourage workers not to hang on to jobs longer than planned.
Because their returns would be guaranteed, workers would be able to retire on schedule, she said.
We need people to retire when the economy tanks in order to keep up aggregate demand and to reduce pressure on the labor market. And the only way to do that is to unhook the finance markets from retirement income, she told Reuters.
Not only would removing the preferential tax treatment of these vehicles raise investment taxes by 0 billion a year, as well as affecting the Rich making less than 0,000, it would surely prompt many Americans, already shell-shocked by the markets recent losses, to flee stocks. There are trillions of dollars in American retirement accounts, and abandoning the higher-returning stock market at a probable bottom is probably the worst long term financial move that an investor could make.
Simply put, if you believe in the American economy's prosperity over the foreseeable future, then you have to believe in the stock market. If you do not, then you have to admit that the government will have to fund all of its promises one way or another. The low lying hanging fruit of 401k, IRA, and Retirement plans may just be too tempting for them to look the other way.
Barack Obama - The End of 401k, IRA, and Retirement Accounts As We Know Them?
Mike Rowan is the Chairman and co-founder of eRollover.com, the leading online destination site of choice for retirement fund information, eRollover's user-friendly platform allows do-it-yourselfers to directly take charge of their retirement accounts, or for others to locate a financial advisor.
Please visit us at http://www.erollover.com
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