White House: You Have “More Than Is Needed To Fund Retirement ”

The Obama administration is, at every turn trying to tell you what you can and cannot do with your money and what is acceptable and what is not. According to his new budget, it will cap savings for many prosperous Americans who will fund retirement themselves through retirement savings accounts, but it’s also possible it might affect even the smaller savers in society.

Some savers put their money in these types of accounts to keep Socialists like Obama from taxing them to death in order to leave their children an inheritance. They don’t have the mentality of “I’m spending my kid’s inheritance” on retirement.

However, keep in mind that this the same Barack Obama who doesn’t have to think about these things as he spends millions of taxpayer dollars on vacation and he’s not even retired. In fact, it’s questionable as to whether he’s ever really had a real job a day in his life. Yet he presumes to know how much Americans can earn and what a reasonable lever of retirement savings is. His arrogance was on display in Quincy, Illinois as he said, “I do think at a certain point you’ve made enough money” and then proceeded to elaborate on how it was only “fair” that the government should confiscate the rest by raising taxes.

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That statement was on what one makes. This cap on retirement accounts is on what you save.

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“About half of American workers have no workplace retirement plan,” reads the Obama’s budget. “Yet fewer than 1 out of 10 workers who are eligible to make tax-favored contributions to an Individual Retirement Account (IRA) actually do so, while nearly 9 out of 10 workers automatically enrolled in a 401(k) plan continue to make contributions. The Budget would automatically enroll workers without employer-based retirement plans in IRAs through payroll deposit contributions at their workplace. The contributions would be voluntary—employees would be free to opt out—and matched by the Saver’s Tax Credit for eligible families.”

“Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle class families save for retirement,” reads the budget, which doesn’t define what a “middle class family” is.

The White House proposal includes,

“Prohibit Individuals from Accumulating over $3 Million in Tax-Preferred Retirement Accounts. Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle class families save for retirement. But under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving. The Budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013. This proposal would raise $9 billion over 10 years.”

Based on a $205,000 annual annuity payment, amounts over $3 million in aggregate across all retirement accounts should be capped. According to Forbes, The $3 million is based on today’s near generational-low interest rates. Higher rates would make that $3 million fall. However, what we aren’t told in this budget is how this raises $9 billion, but that’s par for the course.

US News reports,

Most Americans may greet this news with a shrug; after all, only a tiny sliver of Americans saving for retirement have that much money saved up. According to a new analysis from the Employee Benefit Research Institute, only around 0.06 percent of total IRA account holders had $3 million as of the end of 2011, and 0.0041 percent of 401(k) accounts had $3 million as of the end of 2012.

Still, there is the potential for that cap to affect yet more people. One is a changing financial environment. Based on past annuity prices, EPRI projects that the account threshold could fall as low as $2.2 million, and even lower if and when interest rates grow.

Of course, a threshold of $2.2 million would still only take into account a small sliver of Americans. But depending on how such a plan is administered, it could discourage employers from providing retirement plans, fears one expert.

Jack VanDerhei, research director at EPRI said, “I think a lot of what people are missing about this is this is most likely going to be very, very difficult from an administrative complexity standpoint for employers to deal with this.”

Vanderhei went on to add, “Obviously they have something in mind. And whether that means no additional deductible contribution, whether that money has to literally be taken out of the account, we unfortunately don’t know.”

Others have spoken out against this as well. CEO of the American Society of Pension Professionals & Actuaries Brian H. Graff said that businesses would “lose their incentive to maintain a plan, and either shut down the plan or greatly reduce benefits.”

Just like Obamacare, this will affect individuals and businesses. It will be a bureaucratic nightmare and only add to the problems we face. This Socialistic “budget” policy presumes to tell free people what they can and cannot earn, what they can and cannot save, and what they can or cannot do with it. Instead of bleeding the people dry through taxation, why doesn’t the administration look at makes serious cuts to a bloated federal government? Well then they would have to feel the pressure wouldn’t they? That’s why they aren’t doing it.

While many in our society have been impacted by the economy and suffer because of the idiotic decisions of Barack Obama’s policies and the policies of the Federal Reserve, they continue to be these ones that he claims to be helping in all of this. In the end, the middle class is always taking it in the shorts when it comes to Obamanomics.

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