Modern Day Financial Planning – A Fraudulent Myth?

What is behind the hype of “qualified plans”?
(401k, IRA, TSA, and similar plans.)

1: Financial institutions, represented by financial planners, promote putting money in their “retirement savings box”. They know that locks, in the form of taxes and penalties, will keep it there for their long term profit. They also know it creates dependence on their “lending box” to finance our ongoing needs and wants, forcing us to pay out a volume of interest dollars that is far greater than we can earn. On balance: they win, we lose.

2: Government promotes such plans knowing that many “participants” are forced by circumstance to use “their” money before maturity, causing heavy penalties on withdrawals or multiple income taxes on loans from the plans. Ultimately, government owns an “annuity” on our lives with guaranteed tax paydays as long as we live and windfall profits when we die. Plan participants are the government’s money farm.  (Name one economically viable reason for penalties other than governmental greed.)

3: Financial planners promote such plans knowing that tax laws guarantee they will be regularly called upon to handle roll-overs of large bundles of locked-up money, earning big commissions every time. So, “Max your contributions baby; we’re here to help”!

4: Employers promote such plans, taking credit for “enabling” employees to put their own money away. Some have matches, but they disappear in tough times and pale in comparison to the “old days” when 100% of retirement plan money came from them.

5: The account statements would be fraudulent in any other industry. They create the illusion that what you see on the statement is yours. 100% of “contributions” are shown as an account balance, hiding the fact that unpaid and totally unavoidable taxes are a very large part of that number. It’s a deceptive practice. It is virtually impossible to withdraw anything near the amount shown. Other financial vehicles require so-called “full disclosure” – why not 401(k), IRA, 403(b) and other “qualified” plans?  

 

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