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‘Save My 401(k)’

Posted by Larry Doyle on November 28, 2012 4:46 AM |

No single topic has received as much traffic here at Sense on Cents as commentaries I have run over the last few years regarding the potential takeover of or infringement upon our personal retirement accounts by Uncle Sam.

Well, with the fiscal cliff staring us right in the face and Uncle Sam increasingly squeezed for that do-re-mi, the Old Man would seem to have his eyes right back on those retirement accounts. How so?

The American Society of Pension Professionals and Actuaries draws attention to this issue with the recent launching of a campaign called ‘Save My 401 (k),

The single most important factor in determining if a worker is saving for retirement is whether or not there is a plan at work. Last time Congress took up tax reform in 1986, employees’ 401(k) plans were cut by 70%, resulting in a mass termination of plans,” said Brian Graff ASPPA’s Executive Director and Chief Executive Officer.

Save My 401(k) is a grassroots campaign to protect the tax incentives of employer-sponsored retirement plans from the threat of tax reform. The goal is to educate members of Congress and urge them to preserve the 401(k) tax incentives that are the foundation of American worker’s retirement savings.

According to data from the Employee Benefit Research Institute (EBRI) more than 70% of workers earning from $30,000 to $50,000 participate in their employer 401(k) plans, compared with only 5% who save for retirement without a plan at work. Given these plans growing importance—when families have a retirement savings account—those savings represent more than 65% of their financial assets.

“We understand Congress needs to reduce the debt and raise revenue but raiding the tax incentives for 401(k) plans will put American workers’ retirement security at risk. Tens of millions of Americans participate in these retirement plans, and 80% of them earn less than $100,000 per year. This is a battle that American workers simply can’t afford to lose,” said Graff.

Members of the public, retirement plan professionals, employers and ASPPA members are being asked to contact members of Congress to urge them to preserve the retirement savings tax incentives that encourage employers to offer 401(k) plans and employees to utilize them.

ASPPA is also working with its sister organizations—NAPANTSAACIkRACOPA—and other industry partners to encourage American workers to contact their elected representatives in Congress by visiting

Little surprise that those in Washington who have shown themselves incapable of and irresponsible in managing OUR nation’s fiscal affairs now might look to infringe on one of the very few savings incentives of those who are capable and responsible in managing their own personal fiscal affairs.

Forewarned is forearmed. Navigate accordingly.

Related Sense on Cents Commentary
Blueprint for Government Takeover of IRAs, January 11, 2010
Will Uncle Sam Takeover Your IRA? February 19, 2010
Will Uncle Sam Takeover Your IRA? Part II, April 24, 2012

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mail, an RSS feed, on Twitteror Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • Rob Phillips

    I contact my (and other people’s) elected officials with such frequency that we should all be on a first name basis by now.

    Alas, with each issue I touch on, I typically receive a form reply, or I am gently turned away by phone staffers letting me know they’ll ‘pass along my concerns.’

    So far, zero of the hundreds of attempts I have made have yielded any change that I am aware of, though I suspect my persistence has or will likely land me on someone’s watch list. ; )

  • Peter Scannell

    Why shouldn’t Uncle Sam raid mom and pop’s 401k – everybody else does.

    Mom and pop are the only traditional (long term investor) left. The 401k savings of the American family alone amounts to more than $3,000,000,000,000 – it is the preverbal trough where all the pigs feed.

    Don’t get me started LD, when I blow the whistle for the second time – I need to do it right!

    Hell bells

  • fred


    I believe this one is just a Dem scare tactic to gain support for raising rates rather than eliminating deductions or tax preferences.

    The one big issue raised here, however, how would people pay these taxes due? 401k tax liability could be rather large and you incur a penalty for early withdrawal.

    If you extend this problem out further, taxes are calculated based on AGI, when you either raise rates or remove other deductions, credits, preferences, tax liability may be quite high in terms of disposable income remaining after bills are paid, education, mortgage, auto, fuel, etc.

    Even many so called “wealthy” people tend to live to there means.

    Given penalties and interest, this could potentially become an even bigger yoke than credit card indenture to taxpayers.

    As distasteful as it might be, if I were the federal government, I would leave this one alone and focus on means testing/taxing social security and medicare benefits.

    • fred

      On the subject of the fiscal cliff, the other night I wanted to see how hard it would be to come up with President Obama’s magic number of $1.4T.

      I’m not an expert on the federal budget but honestly, it didn’t take very long. Across the board 5% budget cut, sell off the strategic petroleum oil reserve, 100% tax on corporate excess cash, means test federal benefits, phase out deductions for income >250M.

      Could the politicians please stop all the partisan grandstanding and get back to addressing this countries real problems like education and family values, effective regulatory enforcement, developing/building out our energy resources and making our government more efficient and affordable.

      • fred

        I’d like to add…how to make America and Americans more globally competative.

        “any advanced technology is indestinguishable from magic”.

        Let’s get back to the business of bringing the magic back to America.

  • Peter Scannell

    You gave me a little opening LD that I cannot resist – I lost everything for 401k investors and would do it all over again if I had to (though I would have worn a helmet). And I’m not done yet!

    In February 2009, I descended into the bowels of the Securities and Exchange Commission in Washington D.C. leading to the Office of the Inspector General for a scheduled hour deposition that lasted almost four. The first thing I discussed was a short timeline of events that resulted from article I a participated in a year earlier (a preferred and effective method for catching crooks is to watch them squirm). Obviously, as LD is aware, far more damning evidence has been made available with Kotz’s office before, during, and after my February 2009 deposition was made public in a year later.

    Just ask Charles Ed “the fixer” Haldeman, the abysmal at best (what is known) former CEO of Putnam Investments. I called Chuck out as a fraud in a Dartmouth Review article titled “Trusting Ed Haldeman,” which was published on April 21, 2008. The article attempted to bring to light an overlooked event during my in my whistle blowing in with the SEC in late April, 2003.

    After the Dartmouth Review article was published, a number of unanticipated events occurred with entities either identified with the never before exposed securities fraud, and or, affected by the securities fraud – let’s just say they were more red flag moments in my journey.

    The following squirming events I believe were directly related to my calling Haldeman a fraud on the very campus where he was he became Dartmouth’s Board Chairman after donating $10 million dollars to Dartmouth to erect a building. The building is named “The Haldeman Center,” and houses the “Ethics Institute.”

    Beware of those that consider themselves to be the most sanctimonious among us.

    April 21, 2008 Dartmouth Review Featured Front Page article, “Trusting Ed Haldeman”

    The article attempts to expose Haldeman’s part in a cover-up involving a change in name only to a Putnam Investment international flagship fund two days after I met with three SEC investigators while possessing a spread sheet with $650,000,000 in market-timing trades using only that international fund.

    April 25, 2008 WSJ “SEC to Lose Key Enforcement Official”

    SEC Walter Ricciardi announces in the WSJ that he will be resigning – “and will recues himself from all cases.” Unfortunately for Mr. Ricciardi, he was misidentified by the author in the Dartmouth Review article for being the former SEC Boston District Administrator Juan Marcelino. Juan Marcelino had resigned suddenly in the fall of 2003 when it was reported in the press that I had been to the Boston Office of the SEC with the can of worms. When Marclelino suddenly resigned in Nov. of 2003, he was quoted in the Boston Globe when asked if he was leaving for because of his failure to respond to my whistle-blowing, his response was “I just want to fade into anonymity.”

    May 1, 2008 The Boston Herald “Putnam Investments loses rank with broker, taken off ‘preferred’ list” “

    Putnam Investments, still recovering from the mutual fund trading scandal of 2003 and dealing with a stock market slump, has fallen out of favor with a major financial services firm that caters to individual investors. Edward Jones pulled Putnam from its “preferred fund families” list, which the firm’s financial advisers focus on when selling investment products to clients.”

    May 3, 2008 Boston Globe “Putnam owners reaffirm support for Haldeman; Move signals faith CEO can forge a turnaround”

    Putnam Investments’ Canadian owners will keep chief executive Charles “Ed” Haldeman Jr. on for another two years, despite the Boston investment firm’s lagging performance.

    After speaking with Putnam’s senior management team, and executives at Power and its Great-West Lifeco unit that controls Putnam, “We have all decided that the best thing for Putnam is for me to stay,” Haldeman said. “We have more work to do.”

    Haldeman will keep both the titles of chief executive and president, a spokeswoman said. He declined to discuss whether the terms of his employment agreement have changed.

    June 12, 2008 The Mutual Fund Wire. Com “Haldeman Evaluates His Years at Putnam”

    “Ed Haldeman, whose stint as Putnam Investment’ CEO comes to a close next month, looked back on his years at the helm of the Boston-based firm during a conference call with reporters on Thursday morning. He talked about why he is relinquishing the CEO post and insisted that the move has nothing to do with the allegations put forward recently by the Putnam whistle-blower.”

    “Haldeman stressed that his role change does not have anything to do with the Putnam whistle-blower Peter Scannell’s recent allegation. “This is not in any way connected to Peter Scannell’s theory.”

    June 13, 2008 Boston Globe “Putnam taps former executive as CEO”

    “In May, Haldeman disclosed that Power Financial had extended his contract at least through 2010, which a spokeswoman said at the time would keep him in the roles of chief executive and president. Yesterday, Haldeman said that was the likely scenario at the time and it wasn’t clear if Reynolds would join the company until this week.”

    You can’t make this stuff up. And this is not even the good stuff!

    • Peter Scannell

      Not one mention of the fund change in name only in the dark of night two days after my meeting with the SEC BDO is made in the SEC OIG’s Memorandum of Inquiry PI -09-38

      Not one mention of the fallout after the Dartmouth Review article was published is mentioned in the SEC OIG’s Memorandum of Inquiry PI 09-38.

      The fix is in – I was fooled – but not a fool.

      Hells bells

  • Bill

    Nevermind eliminating the incentive for retirement savings. The real nut issue is government confiscation of retirement accounts, 401(k)s, iIRAs, et cetera. Of course, there will be an exception for pension plans for the super wealthy. But how to get around the fifth amendment prohibition on government taking of private property? Sample: the government will take your retirement account and give you a 50 year bond paying minimal interest. All to be held constitutional by Obama judges.

  • Mike

    I decided to decline the 401(k) offered to me at work.

    Instead I will spend the money on building up a collection of physical gold and silver.

    The only thing I’m worred about is that all of my transactions will be recorded and the Govt can still take it away.

  • RB

    I don’t think it is about eliminating tax deferral.. it is about getting Government hands on all the retirement monies.. as it is the only meaningful amount of funds not already in the clutches of our corrupt and spendthrift politicians. News on November 19, 2012 indicated a bill was presently on Harry Reid’s desk mandating conversion of all retirement balances into new government annuities.. and we all know our monies are gone as soon as they get their grubby hands on them. Here is a further link that ought to wake people up to what is already afoot and may begin to move very fast compared to the normal sloth of Congress

    The new “grass-roots” SaveMy401k movement is about 5 years too late and quite frankly, Congress doesn’t pay real attention to the concerns of the masses any more anyway.

  • RB

    Sorry folks.. that link was to an older story from 2010.. please disregard

  • Donna

    I appreciated your “Save my 401(k ) article. I contacted you earlier about POGO. It may be too late to save retirement benefits. Certain Corporations (and majority stock holders) are using the retirement benefits to purchase additional companies and some of the Teamsters are assisting.

    SEC filing states securities are offered to employees pursuant to employee benefit plans but employees are not notified. Instead, securities are purchased and sent over-seas. That is what I was a whistleblower about among other things and was terminated. The DOL refused to supply requested documents and the Company refused to supply a yearly statement of our “plan” benefits. The NLRB altered my testimony previously (Feb. 2011) and omitted evidence, refusing to pierce the corporate veil. Like mentioned earlier, it is another Enron but on a larger scale. If the Government doesn’t stop the Corporations from confiscating laborers benefits first, unless Corporate CEO’s are assisting the Government, not realizing their turn will come….

    Suggestion…. for damages…. have employees become share holders so companies are run more to benefit the LABORERS. What a mess this Country is. All over money and power. I am fed up with the repeated harassment to accept “settlement offers” just to prevent due process. Who does a whistleblower trust????

  • Eddie

    Well as you know i live in a bit of a dream world but some of my ideas are as impossible as others let alone the possibility of government plans working as intended.

    In my world i’m not happy about all the things i’ve been forced and coerced to do to keep my money. If these tax shelters help forgo taxes then maybe our government can go without them completely. or do they collect more from people who are not savvy enough or capable to open them.

    Just let us keep our money in the first place. In my lifetime i’ve opened ira’s, 401k’s, trusts, 529s, ugmas, utmas, var annuitues, ins policies, mtge’s and probably more to avoid taxes.

    The unintended consequences of costs for society must be huge. I’m ready for the fiscal cliff, let’s go, shrinking government spending alone will be the biggest waste reduction and boon to our economy since the industrial revolution, we won’t need tax shelters, let’s go!

  • Virginia

    Are there really any retirement funds left or is it just paper accounting? We have to be realistic here if everyone that had a 401k cashed it in now – the companies couldn’t perform the payouts…

  • Mark

    Not long ago while watching the Wizard of Oz I had an epiphany; the Wizard was a 401(k) salesman! Unfortunately,this is not a joke. There really are similarities between the Wizard of Oz and how many 401(k) products are sold in America today. There are two similarities I would like to discuss in this inaugural column of the 401(k) Ethicist;

    Professor Marvel’s magic elixir, and the great and powerful Oz. Just as Professor Marvel claims that his magic elixir cures what ails you, some claims used to sell 401(k) products are just as worthless in providing you fiduciary protection. And, just as Dorothy and friends believed that they could rely on the Wizard to get back home, many retirement plan sponsors believe they can rely on their 401(k) service providers to help them fulfill their fiduciary duties.

    Like the Wizard who used elaborate props to make himself appear great and powerful, some retirement plan providers would also like you to “Pay no attention to that man behind the curtain.”

    One of the best examples to understand this witch’s brew is to examine Vanguard funds when they are found within certain group annuity 401(k) products which are offered by some insurance companies. Vanguard has a well-respected reputation
    for low-cost, quality mutual funds, and generally, expenses aren’t an issue with Vanguard funds or a Vanguard 401(k) product.

    However, in some 401(k) products you might find, for example, the “XYZ/Vanguard S&P 500 fund.” While the plan sponsors might think they have chosen the Vanguard
    S&P 500 mutual fund for their investment menu, in the mouseprint of their contract they might discover they have actually chosen what’s called a “subadvised account” and not the actual Vanguard S&P 500 mutual fund.

    The Vanguard S&P 500 fund (VFINX) has an expense ratio of 0.18%. However, in one plan I’ve reviewed, the expense ratio of the “XYZ/Vanguard S&P 500 fund” was 0.53%—almost 300% over retail. On top of this the participants were paying an
    additional 0.50% wrap fee making the total cost nearly 600% over retail.

    Unfortunately, the plan sponsor heard “Vanguard,” and mistakenly thought he had
    chosen a low-cost 401(k) product.

    The Wizard of Oz, Retirement Plans, and You

  • Randee

    Traditional pension is much preferable to a 401K. IF you have a 401K you are dumb and not thinking clearly.

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