President Obama, please remove the 10% penalty on 401K withdrawls ASAP.

[roamer65]

With all of the problems the states are having with UI benefits, people will need to access some of that money to survive.

Rant over.
:rant:

[MarianJack]

1. I Completely agree!

[lifesbeautifulmagic]

2. i was thinking about making a post like this

thank you so much for doing it - k & r

[customerserviceguy]

3. Great idea

and stop the mandatory 20% withholding on those funds, too. Many people are not going to owe a lot of tax if they take those funds out early in the year, because they're out of work.

And while we're at it, let's go retroactively to January 1, 2008, and declare unemployment benefits nontaxable again, like they used to be thirty years ago. The 10% withholding that some people are doing could stop, and the extra refunds for those who had it withheld last year will go to the most needy communities, the ones that have been hit the hardest by layoffs.

One key factor of "stimulus" is that it gets plowed back into the economy as soon as possible, of the so-called middle class tax breaks being proposed, wouldn't these two things make it into the economic stream faster than anything else?

[roamer65]

7. That is a damn good point as well.

:applause:

[Statistical]

13. I never understood the taxing unemployment benefits.

I mean it is kinda dumb.

Govt gives you $10 then asks for $1 back at end of the year.
Why not just give $9 and call it even.

OR BETER YET
Figure the guy really needs the $10 so you give him $10 and figure eventually he will be working again and the govt can collect their pound of flesh?

Crazy thinking.

I also had no idea the have mandatory withholding on 401K.... On IRA it is option to decline witholding strange it isn't on 401K.

[dflprincess]

14. Wasn't that something Reagan started?

Can't let the unemployed shirk their responsibilities as citizens.

[Statistical]

18. I don't know....

I only used UI once..... (in 2002 I think).

I just surprised when taxes came out of my check. :crazy:
It's like oh yeah losing my job and UI only is 30% or so and then you want to tax me?
Like kicking a man when he is down.

I mean the goal isn't to stay on it forever. I used it for a month or so.
Did the govt with their $2.1 trillion budget really need my $83?

If so could I give them an IOU and........................... PAY THEM WHEN I ACTUALLY HAVE A JOB & MONEY. :wtf:

Ok I am good now. Strange how that still bothers me...

[customerserviceguy]

27. Taxing unemployment benefits

started during the Carter Administration. Certainly, there were people who voluntarily worked in industries such as fishing or construction that paid very well during the "season", but who collected unemployment during the off season. It was reasoned that their UC was just a part of a lifestyle, and that it was fair to tax them on it. An income threshold was used as the test, $20K for a single person, and $25K for a married couple, and thirty years ago, that was good money.

Then, when TEFRA was crafted by that asshole Bob Dole during the Reagan years (and his recession) the limits were lowered to $12K for a single person, and $18K for a married couple. I stopped doing taxes after 1990, and some time after that, 100% of UC benefits became taxable.

I could see using the limits again, but make them equitable (the single vs. couple thing is mathematically unfair) and index them to inflation. $50K for a single person and $80K for a married couple is more like it. That way, you're still taxing some laid off Wall Streeter who was making big bucks until his company shoved the economy into the ground, while protecting the average factory worker or low-level white collar worker who didn't score big before things went bust.

While it would be good to make this change permanent, certainly we could alleviate a lot of pain by making it temporary for the duration of the recession/depression. I'm sure hoping someone on the Obama economic team picks up on this idea.

[Skink]

4. what about the 30 percent 08 penalty?

[amerikat]

9. Make it retroactive. It'll put money in circulation.

The whole IRA thing was a scam anyway. Let the pro's invest for you? WTF.

[unblock]

25. huh?

the point of the ira was to let you invest it yourself, or hand it over to a pro, your choice.
my iras are all at discount brokers, i can put it in stock, mutual funds, whatever, whenever i choose.

[madrchsod]

5. i`m still paying taxes on my withdraw from 4 yrs ago

those stupid stimulus checks went to pay off the back tax...i had to pull out and use every penny to pay bills while i was on sick leave...

[gristy]

6. folks will need that money to retire

There was a reason that penalty was there in the first place - to discourage people from "raiding" their retirement savings. I don't think it is a good idea to remove that discouragement. Folks who absolutely must have the money can still access it, just less 10%.

[iamjoy]

11. I Think It Depends

I've worked in benefits, so I've talked to people about setting up their 401(k) accounts and taking money out of it. There really were people (active employees) who got angry when they found out they couldn't take out the money for Christmas presents. This is a retirement account and I'm not convinced things will be so much better when it's time to retire. On principle alone I don't think you should be raiding your retirement to buy your kids a Wii.

However, I think there are legit reasons for taking out the money early, and I'm actually in agreement with the IRS Safe Harbor criteria for "hardship withdrawals." However, the IRS may still impose a penalty. I think the penalty should be waived if the money is for medical bills or preventing eviction/foreclosure from one's primary residence.

[lifesbeautifulmagic]

15. clearly you have never been in a situation like mine

my husbands job was eliminated after 20 years this past summer, 2 weeks later it was advertised in the paper as non benefited contract labor at 2/3 the salary. My husband has been sending out resumes to beat the band for the past 6 months. NO ONE IS HIRING. no one. no one is hiring. Do you understand that? This week I found out that my job will either be eliminated or my hours reduced.

When this thing happend we had about $17,000 in savings, plus a 401K. We had a savings account, no credit card debt and a mortgage. All we did was go to work, be involved with our community, vote democratic, and pay our taxes.

We sold some assets (car, trailer) to pad that savings account at the time of the layoff back in July. Every week I see that figure dwindle lower and lower and lower. My husband has been reduced to looking at jobs that pay $12 an hour, which is about 1/3 of what he used to make and is qualified for. AND THEy ARE NOT HIRING.

So at this rate, we will not be able to afford our mortgage by maybe August of this year. That 10% may keep us in our house. If you don't understand that, I am pretty damn sorry. I won't wish ill on you. I won't wish that you are staring at losing your home at 50. I won't wish that you turn 50 and wake up every morning knowing you can't send your children to college. I won't wish that you hit middle age living in an apartment. I won't wish that you wake up every morning wanting to cry with the fear. I won't wish that can't even take your wife to a movie because you have a $700 cobra payment due. I sure didn't wish it on myself, but that's what I got.

[Catherine Vincent]

20. I'm so sorry. I hope the situation gets better for you and your hubby.

I hope you two find employment soon.

[lifesbeautifulmagic]

21. thank you

i am really hoping that between Obama's plan, and our area's new transit plan (passed in Nov), something will turn up. I am trying to stay positive, thanks for your kind words.

[roamer65]

23. You are in a situation that many of us soon may face.

I hope your husband finds work soon so at least one of you has a job and can make ends meet, in case you get laid off. I have my fingers crossed for both of you. Hang in there. :hug:

[amerikat]

8. Agreed.....retirement is a dream, short term survival is reality.

Everyone I know is tapping their IRA. No penalty and no taxes on withdraws, that could satisfy the pubs request for tax breaks. Kill two birds with one stone, so to speak.

[napi21]

10. In a way I agree with you, but not completely. I'm afraid that many

people will view that money as they did "hoe equity loans", and look at the trouble THAT got them into! 401K's were initiated for one purpose...for when you are older and can't work anymore. If it's used now, what will happen to those people when they retire?

Maybe there could be some specific criteria where the penalty could be waived IF you could prove a REAL EMERGENCY, but I don't want to make it too easy.

[MrSlayer]

12. My Annuity has a 20% penalty.

Which in retrospect I should have taken last summer when I thought about it. I've lost more than that penalty would have been since. It's disgusting.

[INdemo]

26. Guess I was lucky I only lost 18%

but when we talk about these loses,where did the money go. For every loser there is a winner..Were investors buying short or these funds...The money just didn't dissipate...I can't borrow or draw from my annuity,at least that's what they tell me. I think they are giving me a run-a-round..

[AwakeAtLast]

16. I committed one of the so-called 'cardinal sins'

I actually borrowed $8,000 out of my 401K a year ago. Yes I know, I have to pay interest, but it's lower than the amount I would have lost had all of my money stayed where it was. My sin turned into something intelligent in the long run!

[backscatter712]

22. On the bright side, you're paying interest to yourself.

That 8% interest goes straight into your 401k balance.

[Muttocracy]

17. my employer requires contributions to my retirement account

I have some control over how it's invested, but it's absurd that my money replacing losses on the part in stocks when I'd rather take that money to pay off my student loans.

[TahitiNut]

19. The "pump and dump" marketeers wouldn't like that.

They like the price inflation caused by money with nowhere else to go. :shrug:

[unblock]

24. i believe he already announced that he would permit access to 15% of retirement funds

each year, with the intent of making it retroactive to 2008, so you would be able to immediately withdraw a total of 30% from each of your funds without the 10% penalty.

of course, that was back when he was campaigning, but i would think they would want to make it a priority.

[skeewee08]

28. Amen, were still paying taxes on our 401 K withdraw when my

husband lost his job in 2006 to plant closure(plant moved to Mexico).

[deaniac21]

29. Why encourage people to make bad choices?

[bobbert]

30. Boy I'm lucky to be only 30

My wife and I upped our input into the 401k because we're getting way more shares for our money than we were last year.

[hamsterjill]

31. I agree with this!

It's hard to think about retirement, when you're probably going to starve to death before you get there!!!