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Post by judes on May 5, 2009 20:01:32 GMT -6
Ah more tragedy on the horizon. Just as pensions are being eliminated along with benefits, and on top of significant plan losses, now this. Some 401k plans are starting to block withdrawals. How is this legal? This spells ponzi scheme if ever there was one. If plans can only make money if more and more people are entering and lose money merely because people are exiting this is nothing more than a ponzi scheme! We are screwed, I lost my pension and now I have a strong feeling I am gonna lose my 401k. And you know what sucks there is nothing "safe" that I can invest in in my 401k, no cd's, no treasuries that I can tranfer too, I am stuck. online.wsj.com/article/SB124148012581385199.html
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Post by unlawflcombatnt on May 5, 2009 21:31:01 GMT -6
This same kind of stuff happened during the crash in 2001 (before 9-11).
I had money in a retirement account that was crashing, and the withdrawal amount allowed was abruptly cut in 1/2 in mid-2001. I lost quite a bit of money before I could get the remainder out.
That's the last time I allowed any of my money to go into stocks or mutual funds.
People should really consider getting their money out of their 401Ks, before it's all gone.
I learned my lesson the hard way. But I never needed a refresher course after my first "lesson."
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Post by judes on May 5, 2009 21:52:22 GMT -6
Yep, that is a hard lesson to learn. I can't get it out with out incurring a huge penalty. Maybe it would be worth the penalty at this point though. I'm just hoping they don't freeze me from being able to transfer it out before I lose my job. At that point I can transfer it to something else without penalty, but not while I'm still employed there. Even then I'm not sure what is safe to put it into, since I have to wait till 59 1/2 to withdraw it at that point, and a lot could happen until then. I definitely wouldn't invest in a 401k if I knew then what I know now. It is a total scam!!
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Post by whoswho on May 6, 2009 7:17:24 GMT -6
Losing my job was a mixed blessing because they had taken our traditional pension plan and converted it to an ESOP. It was ALL company stock, 100%. Everything I had worked for for 23 years existed as THEIR stock. As long as I was an employee, I couldn't touch it.
When they booted me out, I rolled the ESOP over to a local bank into a 401K. I sold ALL of the company stock when it reached a peak price. I put half of it into government securities and half of it into mutual funds that had done well for me in the past. That 401K has always has always held its own pretty well, although it has had losses. Just think, I was going to KEEP all my company stock! A friend told me I should sell it. "It can become worthless overnight," he says. "That's what happened to my wife's retirement."
There was another small portion of the "old" retirement money which was not included in the ESOP, I believe it was in a Met Life insurance annuity.
When I was downsized, I was given the option of taking 50% of my ESOP.... and "getting" $969/month in retirement.... or taking 100%, and only "getting" $169/month in retirement. We got a bunch of papers explaining how it was calculated, but it never made a lot of sense to me. I figured if they were evil enough to do this to me, I didn't want to trust them to do the right thing.
I was glad I followed my instincts (or maybe I should say, the leading of the Holy Spirit), because their stock has been all over the place ever since.
It was just recently six dollars a share (down from $70). I feel so sorry for those still working there. Everything they've worked for all their lives is literally on a Las Vegas gambling table. It must be horrible not to know if you're going to have money to retire on or not.
Ironically, when I was very young, I didn't save aggressively... because I worked for such a great company, and THEY were going to take care of all that, so I didn't really have to.
Companies are liars. And sadly that's the assumption we have to operate under, if we don't want to be utterly screwed.
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Post by whoswho on May 6, 2009 7:19:41 GMT -6
Judes, how many years do you have in with your company?
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Post by jeffolie on May 6, 2009 8:37:42 GMT -6
I and my adult children never put money into 401Ks, we built up Roth IRAs which are free from income tax when you withdraw but not tax deductable when you deposit them.
I do not trust the government. Perhaps Roth IRA rules may change and we will be screwed, but for this very moment we are OK. Roth IRAs are very flexible and available through banks, brokerages, etc.
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Post by judes on May 6, 2009 15:22:32 GMT -6
Hi whoswho, I have been at this company for 19 years. It sounds like you made a wise move getting out. I just hope my plan doesn't get blocked before they let me go. They keep saying it could be soon, but my company is tied up in all these auto task team negotiations, so who knows any more. Luckily I didn't invest in it at all the first 6 or so years because I thought it would be better to pay off student loans before investing in the 401k. Then when I did, I only contributed the amount necessary to get the company match. I read an article earlier today about the former Fidelity guy going to congress to get them to make 401k enrollment mandatory for new hires of companies that offer them? WTF, why, let people do it on their own if they want.
I lost a big chunk when our company filed bankruptcy and the fund administrator sold all the company stock from the plan when it reached it's lowest level. They used to make you invest the portion for the match in the company stock, then restricted how often you could transfer funds. I got screwed then too, ughhh. I feel like Wallstreet is a complete scam. It is definitely not for the little people to get rich, and we'll be lucky if it provides anything in retirement.
Whoswho, did you say you took the annuity option or did you forgo that when you left? Just curious, I never heard of being offered such an option.
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Post by whoswho on May 7, 2009 9:41:16 GMT -6
Hope this explanation isn't too confusing to you, because it was VERY confusing to me, but here goes.
The majority of my ESOP (which was formerly a defined benefit plan) existed as company stock when I was downsized, and yes, THAT part I rolled over 100%, into a "new" 401k at a local bank.
But! There is STILL a very SMALL portion of my retirement money that the company retained, and I won't get that until I'm 65, but it doesn't amount to much. It's with Met Life as an annuity. I wasn't given the choice to do anything with it. Since I chose to roll over 100% (of the ESOP part), I will only get a teensy check of $169/ month from the MetLife part. That is, unless the company goes bankrupt before the year 2018, which is looking possible. I guess the Pension Benefit Guaranty folks would maybe help me if that happened? I'm afraid to count on it.
Then, to make it even more confusing, in addition to the above, I ALSO had something like a thrift plan with the company. We were never blocked from accessing that the way you guys were. It is with Fidelity, and I didn't do anything with it, so the company still pays to maintain it, I guess. I just can't contribute to it. If I wanted to roll it over, I could. I just didn't do it.
I did what you did, sort of. I didn't save aggressively early in my career, but I certainly didn't waste money, I was paying off cars and the house, etc.
Nineteen years is a long time (I was 23 years)! Does the PBGC back up what you lost in your pension? Maybe all is not lost?
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Post by whoswho on May 7, 2009 10:23:28 GMT -6
Oh by the way, even in the thrift plan? There is a small, but MANDATORY amount of company stock. I can't sell it, I have to have it. These weasels never quit.
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Post by judes on May 7, 2009 17:57:08 GMT -6
thanks whoswho, that was a good explanation. Hopefully metlife won't go bankrupt, my husband has a small annuity with them too, supposedly they are guaranteed through the state agency up to $100,000 I have been told, even though I know that may not matter where we are headed. It seems the defined benefit pensions will become extinct soon, I just read that Well Fargo froze their employee pension plan today also. The only ones left with defined benefit pensions will be the upper level executives and CEO's because their pensions are totally seperate and untouchable from the rest of the employee pensions. They are covered by their golden parachute SERPs plan, supplemental executive retirement plan, which is completely out of reach of any bankruptcy proceeding. Nice huh? What is good for the goose is not always good for the gander. Yet when they froze our defined benefit plan and replaced it with a defined contribution plan (even though it wasn't really a replacement because we always had that option to begin with) well they tried to sell it as being so great, because we were in control of our own money blah blah. But if it's so great why don't they do away with their own defined benefit plans? Hypocritical lying crooks is what they are.
Also, what I am learning is that if our pension does get turned over to the PBGC, which it's looking like it will, I may be on the losing end again. According to their website you have to be at least 45 to get covered and I am not there yet. So once again I get screwed, so I am looking at kissing almost 20 years of where I thought I was contributing to my pension for retirement gone, up in smoke. Where does this ever end? But according to the talking heads all is well in the world.
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Post by whoswho on May 8, 2009 6:22:22 GMT -6
That reminds me of the famous Bill Mauldin cartoon from WWII: I think the caption was, "Beautiful view! Is there one for the enlisted men?"
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Post by whoswho on May 8, 2009 6:25:50 GMT -6
Also, what I am learning is that if our pension does get turned over to the PBGC, which it's looking like it will, I may be on the losing end again. According to their website you have to be at least 45 to get covered and I am not there yet. Interesting how all the "rules" work in *their* favor, and at the same time, work to screw us, isn't it? I always said, if we were all held to the same standards, there would be some changes made in a hurry.
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Post by kramer on May 8, 2009 11:46:43 GMT -6
I took all of my 401K out of the stock market around April-May of last year. And based on this information, I doubt I'll put it back in it.
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