Obamanomics: Penalty Free Withdrawals From Ira/401ks

[andyc2006]

So they can access the funds if the NEED to? Define need. Need to upgrade your car? Need the new iMac? Need to take that trip to Hawaii?

I think your faith in Joe Six-Pack's financial maturity is touching, if misguided.

Ugh... I don't need to have faith in how another person chooses to use their money!

His money, his business. If he starves in old age -- that's also his business!

See, no faith in j6p's financial maturity is required.

[Jingthing]

This is a bad proposal, pure and simple. You have to be really blinded by Obama's aura not to see that. It's bad enough that over the last couple of decades that private pensions have all but disappeared in the in favor of 401k accounts that work out well only for people with the financial discipline to direct those accounts well, but it's downright disappointing to think that this agent of "change" sees those 401k accounts as a viable source of shortterm liquidty.

Bad for whom? Who are you to judge?

I saved up buttloads of money, much of it pretax, and I'm looking for ways to avoid taxes on it. But I'm 20 years from being able to pull from my tax-deferred accounts without penalty.

This is a great idea.

Lets not forget that another Democrat (Pelosi) is talking about a "one-time" tax levy on all 401ks/IRAs, because of record deficits. If that passes, we need to find as many ways as possible to get money out of our tax-deferred savings plans, i.e., out of the hands of govt who'll just send more $ to bomb Iraq or pass another No Banker Left Behind bailout.

I agree. It is a proposal that may be useful for some people in some situations, and they will have to judge for themselves.

There has been some talk in the press that the PENALTY should be abolished permanently. With so many people retiring early, often involuntarily, why not?

Regarding that outrageous Pelosi proposal, two things, that won't happen in a down market, and also I can't find a credible source that backs that up, except for right wing blogs. Not saying it isn't true, just that it is so outrageous that I am skeptical.

A relevant snippet from the Wash Post:

.

Taking money out your retirement account is never ideal but in bad economic times it's also important for people to have options, said University of Maryland economist Peter Morici. "It's giving people access to their money in a time of distress," he said. "People should be able to make their own choices."

Edited October 19, 2008 by Jingthing

[andyc2006]

"An ideological republican would say people should have control over their money and be free to make their adult choices, win or lose."

The problem is that there are many adults who have made bad choices financially, and allowing them to spend their retirment savings on self-made "emergencies" is a bad idea.

Allowing them to spend their money? It's none of your f*king business what they do with their money. You're not their keeper, you're not their mother or father, nor is government.

If you can't bear to watch them starve in their old age, then feed them on your dime. I can personally handle seeing people sleep in the beds they've made.

A friend of mine - a real estate broker - wanted me to lend her $15K USD so she could weather out the storm. I refused, and her brother lent her $1000. Now, she's facing losing her home and she asked me to buy her (she mentioned that she would pay me back) several pieces of jewelry. Right now, it's more important for her to add to her jewelry collection, than to save her home. Some people are simply irresponsible financially, and there's little anyone can do about it.

Of course there is.

You can let them face the consequences of their actions. Then 1 of 2 things will happen, 1) they'll die -- natural selection at work, 2) they'll learn to be financially responsible.

Of course, you could also "help" them, and the situation will never resolve itself, but you'll be able to talk about how much more financially responsible you are than everybody else -- that should make you feel a little better.