Do you have a 401(k)? Not for long. Read this...

The House of Representatives, on October 7, heard testimony that called for the elimination of the 401(k) program, in favor of government-run retirement accounts. If this doesn't scare the living shit out of you, I'm not sure what will.

30 years ago, when my dad was working "in the system," he worked towards a retirement from his employer. It was common for one person to stay employed with the same company for an entire 40-year career. At the end of that career, that person would have earned themselves a nice, monthly retirement income, paid out of the pension plan that their employer had built up for them over the course of several decades.

With the amending of Section 401(k) to the Internal Revenue Code, in 1978, it became very attractive for people to start putting money into this account due to certain fringe flexibilities that it offered over the IRA. It also became very attractive to companies who were paying large administrative costs to maintain their own defined benefit plans (pension plans). Companies saw the 401(k) as an opportunity to shift the burden of retirement to the employee, and over the past 30 years that's just what they've been doing. It is very difficult to find, outside of government, a defined benefit retirement plan offered by an employer; most employers now expect their employees to be responsible for their own retirement.

(One interesting tidbit...The very names of the plans hints at the true reason for this shift. Defined benefit plans imply that some entity (the employer) is responsible for providing a benefit (retirement pay). Defined contribution plans imply that the worker is responsible for the contributions towards retirement. A shift of burden.)

Wall Street also loved the idea of a new account type that the masses would flood to, that they could charge administrative fees for.

Chances are you have a 401(k) currently, and chances are that you have a few thousand dollars in it already. Chances are, also, that you are using your 401(k), and the pre-tax benefits it provides, as your primary vehicle to help build your nest egg for retirement.

Well, now, there are people in your government that might like to see your 401(k) plan go away. On October 7, in a session of the House Education and Labor Committee, one Teresa Ghilarducci of the New School for Social Research proposed the elimination of all current tax incentives for defined contribution plans. She also called for the replacement of 401(k)s with a universal government program providing a fixed per-capita government contribution. As part of this, she said, the government would allow all current 401(k) balances to be moved to the government for placement in newly issued bonds to assure the safety of retirement income streams.

She also offered this reassurance:

"[A] guaranteed income from [the retiree's] former 401(k) removes a source of financial anxiety – and this is not trivial – it ends fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets.

"I propose you treat 401(k) asset accounts like the banks, and take some of those toxic assets away from workers and give them a vehicle so they know they can get a guaranteed retirement on top of social security.

"401(k)s are too risky and it's not good policy to have workers run their own their own retirement plan. They want government help and they also want to be responsible."

How did your elected Representatives respond to this? Surely, they were livid at the idea of a government-run retirement program! (Or should I say another?) Surely, in this land of opportunity and self-reliance, the Representatives of the people would fight against the government takeover of your private pension plans!

Well, maybe some, but not all. Read on to see the comments of one particular elected official:

Denis Kucinich (D-OH): "What do we say to all Americans who are the threshold of retirement, about what the government can do? What should we be doing to try and salvage the retirement position of American workers? What kind of legislative action should we be taking now?"

Teresa Ghilarducci (Panelist): "I propose that you offer up to 401(k) asset holders now a 'swap-out' of their toxic assets for a government guarantee. So you do for them what you've done for the banks."

Dennis Kucinich (D-OH): "I'm ready with the legislation, Mr. Chairman."

Kucinich and others are ready with a hair trigger to legislate to "protect" the American people from the downside of investing. This may be one of several threats to the upside potential that we now take for granted in owning our own investments. When lawmakers whip out that pen and the dollars, be afraid.