And Watch Out for the Black Helicopters . . .

Posted on January 21, 2010

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old/young lady optical illusionMost people are familiar with this image – it’s a well-known optical illusion. Depending on how you look at it, you see either a scary old woman or an elegant young lady.

A fitting illustration, I thought, for a recent controversy in the 401(k) world.

A Business Week article published earlier this month discusses how the Obama administration is looking into whether (and how) the government should encourage workers to convert 401(k) balances at retirement to annuities or other guaranteed payment streams. The idea of promoting annuities is gaining traction in the wake of the market meltdown and the deferred retirement plans of millions of Americans.

But, as it turns out, there’s another way of looking at it, at least in the far right-wing reaches of the blogosphere. Apparently, some folks think that the Obama administration is gearing up to seize all of our 401(k) plans. Why? Well, the reasoning (if you can call it that), goes something like this: the federal government can’t keep selling massive amounts of debt to foreign governments. If the feds can somehow force all of us to convert our 401(k) accounts to annuities, then demand for Treasury securities will go up, providing a huge market for the government to continue selling its debt instruments.

Huh?

The U.S. Treasury and Labor Departments – with the support of groups such as AARP – are simply looking into whether the government should play a role in helping workers and retirees who, with the decline of traditional defined benefit pension plans, have to take on greater investment risk as they seek to save and invest for a comfortable retirement. Maybe I’m naïve, but I’m not quite sure how that translates into a government takeover of private retirement plans.

I’d be curious to hear readers’ thoughts on the subject. In the meantime, though, just to be safe, I’m going to keep a watch for those black helicopters that I hear are all around us…