FactCheck.org : IRAs, 401(k)s and You
IRAs, 401(k)s and You
Posted on November 19, 2008 , Updated on November 28, 2008
Q: Are congressional Democrats talking about confiscating IRA and 401(k) investment accounts?
A:No. There’s no plan to seize these accounts. One House witness at a committee hearing proposed to allow some people to trade their old accounts for a new type that would be less risky.
My mother has recently brought up a rumor that Nancy Pelosi and Harry Reid endorse a plan for the goverment to take people’s 401Ks to make up tax dollars. Is this true and where did my mother get the information? (she can’t tell me).
We’ve had many queries about this doozy. They all lead back to a Nov. 4 report posted by the Carolina Journal, a publication of the conservative John Locke Foundation of Raleigh, N.C. Its headline proclaimed, “Dems Target Private Retirement Accounts: Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs.” The report is wrong. There’s been no such discussion.
What has been discussed is changing 401(k) and Individual Retirement Accounts in the future by limiting the deductibility of donations, and offering as an alternative a $600 tax credit and a new type of account with an annual return guaranteed by the government. That’s a controversial idea to be sure, but it’s a far cry from proposing that the government seize retirement assets that investors have already salted away in 401(k)s or IRAs. Nobody we know of is proposing anything like that.
The Carolina Journal report claims that Democrats on the House Education and Labor Committee held hearings Oct. 7 on “proposals to confiscate workers’ personal retirement accounts.” The report describes in particular the testimony of Teresa Ghilarducci, a professor at the New School for Social Research in New York City. We’ve reviewed Ghilarducci’s written testimony and a video recording of the entire hearing, both of which are posted on the committee’s official Web site and are available to anybody who cares to read or listen. Contrary to the Carolina Journal report, nobody at the hearing talked about confiscating or seizing accounts. We also contacted Ghilarducci independently and asked if she’s expressed support for confiscation. She told us in an e-mail message that she hasn’t: