Will Democrats Nationalize Your 401(k)?

Just when you thought this presidential election was almost over...

...just when you figured the worst thing over the next two weeks would be the juvenile name calling that was bound to erupt from McCain/Palin supporters, instead of bringing your mama into it, they brought your 401(k) into it.

If there’s anything that will get my attention, my mother and my money are at the top of the list. The latest gossip going around - a rumor that will no doubt be bandied about the talk radio circuit like it’s the secret antidote for the McCain campaign - is the suggestion that Democrats want to nationalize the country’s existing 401(k) plans.

The way it's being presented on websites will look something like this:

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

Being the natural born skeptic that I am, I noticed immediately that this hearing was held TWO weeks ago.

On the eve of an election, this seems to play right into the fears of voters who are on the fence about supporting Barack Obama and Joe Biden for president. Combine this news with the drumbeat of “he’s a socialist”, and it has the potential to breathe life back into all of the innuendo about Obama’s "radical" associations just when they seemed to be fading away.

The bad thing about an excerpt from an article like this one that gets spread all around the web is the verbiage is always the same, which leads me to believe that there is very little research or fact checking going on. This year of political soundbites should have shown you by now that the testimony of professor Teresa Ghilarducci of The New School for Social Research was one of several of proposals put before the committee at that one hearing alone, but its dramatic nature made it the one you get to hear about.

What are the facts? No legislative proposals have been introduced on this issue. Congress is out of session until next year. Of the five people who testified before the committee on October 7th, only Professor Ghilarducci proposed a detailed solution instead of general policy advice. And even if the Democrats gain a majority in the Senate and the House, you just saw with the Fed Bailout proposal how hard it is to get anything through Congress without close scrutiny.

The bottom line is, Barack Obama is not a big bad socialist Democrat who is going to huff and puff and blow your 401(k) down.

I wouldn’t worry about the alarmist rhetoric surrounding this issue – with the stock market already down several hundred points today, bringing up this issue takes voters right back to how bad the economy is doing these days. But if I were you, I would be concerned about my money.

If you have the means, and are concerned about protecting your assets, find a reputable fee-based financial planner if you don’t already have one – it will be the best $300 you spend this year. If you’re just starting out, pick up a copy of Money magazine when you are at the grocery store. For $3 a month, it has the most practical financial information available, including things you can do today.

Since they only brought my money into it, I’ll stop right there. Now, if they start talking about my mother...