Obama Drops Proposal to Tax 529 College Savings Plans

[birdman]

I concur with Boomhauer. Outright seizure would be illegal (not that it'd stop the feds from trying), but more importantly it'd piss off every bank, most companies and 88,705,000 voters.

Banks happen to like having about 4 trillion in assets that the owners of said assets cannot move or withdraw easily.
Companies like having 4 trillion dollars put towards purchasing their stock.
Near 90 million people are putting money towards retirement. They're probably more likely to actually be voters, but I haven't seen any statistics. Stealing money from 28% of the population won't go over well. 37% of the over-18 population. You'd really need to sell the other 63% in this case. A very large percent of that 37% would be willing to put campaign contributions and votes towards revenge candidates.

So yeah. Screwing around with the tax implications is possible, even probable. Out and out seizure? Not likely. There was significant push back against ACA/Obamacare, which was mostly screwing around with existing structures and not nationalization.

Its actually quite simple.  Have the IRS issue a "rule" that only treasuries count as tax delayed investments under a 401k.  They have ruled on it before (to cover self directed plans, precious metals, etc), and could again.  And whammo, your retirement contributions become govt IOU.

[Boomhauer]

Well slap me and call me Sally. This time boomhauer is more optimistic than I am


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Give me a chance to drop the other shoe

I notice the Obama clan has been careful over the last few years to make the lower limit of a lot of their "eat the rich" tax schemes around $500K*

Yep.

The increased taxation and taking a "small" portion will only be the first steps.

Next comes taking a large portion of the 401ks of the so-called "wealthy". The politicians love to stir up sentiment against the rich, so it'd be easy to do that.

Thing is a lot of the voters that support the left are the ones that more than likely don't have 529's or 401k's.  They could be sold on tax those or less tax breaks would mean more money to dole out to those that don't work.

This too. The FSA and hard core leftists will back it big time.

[birdman]

Its actually quite simple.  Have the IRS issue a "rule" that only treasuries count as tax delayed investments under a 401k.  They have ruled on it before (to cover self directed plans, precious metals, etc), and could again.  And whammo, your retirement contributions become govt IOU.

And I'm not he only one who thinks this
http://www.zerohedge.com/news/2015-01-30/another-step-down-long-slow-road-ira-nationalization

Where he outlines exactly why, and how.

Oh, and in case you missed it last month
http://www.forbes.com/sites/jamiehopkins/2014/12/16/department-of-treasury-finalizes-rules-for-a-new-retirement-savings-vehicle-the-myra/

[Ben]

Don't get me started on the MyRAs.

While it's always good to encourage people to invest in their retirements, the administration is way over-touting the MyRA. They're doing the hip marketing thing, acting like people putting twenty or a hundred bucks a year into an investment vehicle with a crappy return will see themselves sitting pretty in their retirement years. Nevermind the $15K cap to the thing, which in 30 years will probably be about three months living expenses for the average person. Some retirement.

[Ron]

The truly committed leftist looks upon our private savings as a vast reserve of capital unfairly withheld from its proper function of servicing the needs of the state.

[Scout26]

What was it Margaret Thatcher said:

The problem with socialism is pretty soon you run out of other people's money.

[RevDisk]

Its actually quite simple.  Have the IRS issue a "rule" that only treasuries count as tax delayed investments under a 401k.  They have ruled on it before (to cover self directed plans, precious metals, etc), and could again.  And whammo, your retirement contributions become govt IOU.

That I can actually see as being realistic. Which still wouldn't be direct confiscation. Unless you were forbidden from withdrawing out your funds, or given a ridiculously high withdraw penalty. Then yep, it'd be confiscation via creative accounting. Much like Social Security being a tax via creative accounting.

Credit unions are already have with capital requirement rules that essentially require them to buy government bonds. I could see the US government mandating more purchases of government bonds via creative accounting. Direct theft is a bit less likely.

Don't get me started on the MyRAs.

While it's always good to encourage people to invest in their retirements, the administration is way over-touting the MyRA. They're doing the hip marketing thing, acting like people putting twenty or a hundred bucks a year into an investment vehicle with a crappy return will see themselves sitting pretty in their retirement years. Nevermind the $15K cap to the thing, which in 30 years will probably be about three months living expenses for the average person. Some retirement.

What the hell is the point of a $15k max roth IRA with likely below inflation returns?  Seriously, that has about no realistic value aside from a tertiary retirement vehicle.

[cordex]

What the hell is the point of a $15k max roth IRA with likely below inflation returns?  Seriously, that has about no realistic value aside from a tertiary retirement vehicle.

I can't figure out that max either. I get you can roll it into a Roth IRA, and I get there is some appeal to principal protection, but for a $15k upper limit with a low return it doesn't make sense.

Even so, I bet someone's pockets are getting lined by this idea. And I bet they don't have a $15k cap.

[Sergeant Bob]

Obama has dropped his idea of taxing 529 tax-deferred college savings plans. I couldn't believe he proposed it in the first place, considering how popular the 529 plan is not only with the Middle Class, but with the left and Least coast liberals.

In fact Nancy Pelosi even told him it was a bad idea and to drop it. Nancy Pelosi. It's pretty bad when you're so far to the left that Pelosi has to rein you in.

FTFY.

[Headless Thompson Gunner]

Apparently Obama is already trying to tax retirement accounts.  His proposed 2016 budget would cap retirement accounts at $3 million and force savers to put the rest of their money into taxable accounts.

I found this article today, and in researching it I found lots of references to the same idea from back in 2013.  So they've been working on this for a while.