First of all, let me say I am a HUGE Obama fan. I campaigned for him in NH, MD, WV and PA, voted for him in the primary and the general and attended the Inauguration. My Obama street cred is solid, so no need to smack me around for lack of Obama love.
BUT......
Obama made a campaign promise to remove the penalty for early withdraw from your 401K. If you are not in a job that contributes to a 401K, here is the idea. Instead of a company putting money away for you in a pension account, this plan is an employer-sponsored defined contribution retirement plan under section 401(k) of the Internal Revenue Code. Depending on the employer, some equally match your donation, some do a percentage of what you contribute. The big advantage to the employee is that you are not taxed on any money you put into your 401K plan. The drawback, is that you can not take the money out before retirement without paying a penalty AND paying all the taxes. Usually to withdraw money it is a 10% penalty, the taxes and a transaction fee from the broker.
Now with the current financial meltdown, Wall Street tanking and millions upside down on their mortgages and home equity loans- that penalty free withdraw idea would be a lifesaver for so many people.
- You could take out your money out of your 401K before it loses ALL of its value.
- People could pay off the home equity loans that are making them unable to sell off their homes without a huge loss.
- This money could be the cushion for people while they look for work after losing a job, go back to school to get training in a field that is hiring or relocate to a region of the country where the market is better.
My question is, now that this idea could actually help put money in the hands of those who need it and can not afford to hoard it (like the TARP) the idea is MIA.
http://www.politifact.com/...
The St Petersburg Times has an "Obameter", a neat graphic that that shows the status of the Obama campaign promises. Just recently they updated this campaign promise to "stalled". It says the idea was "not in the proposed economic stimulus bill, formally known as the American Recovery and Reinvestment Act of 2009. The measure didn't make it into the final version, either, which the president signed on Feb. 17, 2009." Also, "Congressional staffers have indicated there are no plans for it to get serious consideration any time soon."
It occurred to me that this idea is a bit of an orphan. Their isn't a No Penalty Lobby, it isn't a sexy new infrastructure project that has industry support and you know Wall Street doesn't want people to be able to take their money out of the collapsing market.
Many people- me included- think the biggest problem in the stimulus is that all the people who did the right thing are taking it on the chin. The help is going to (many, not all) irresponsible homeowners, (all of them) irresponsible bankers and companies that make bad products. I didn't buy the big McMansion- we bought a 1500 sqft townhouse in a borderline part of town. I didn't buy Manolos, instead I (like a schmuck) invested in my retirement account that is now in a free fall. I didn't take out a home equity loan to buy a new car, instead we just had to pay 1000 to fix up our '96 Mercury Sable.
This board is all about political activism. How can we turn on some heat? What can I do to put some pressure the process in favor of us poor schmucks that did all the right things but are getting no help.
(though I do like the idea of mag rail)