Government to fund federal debt through 401K/IRA accounts?
"Bloomberg reported Friday that Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Mark Iwry are planning to stage a public comment period before implementing regulations that would require private investors to structure IRA and 401(k) accounts into what could amount to a U.S. Treasury debt-backed government annuity."
Basically the goverment is going to require 401K and IRA contributors to allocate a portion of their contributions to investments backed by govermnet bonds.
Keith Fitz-Gerald describes it a bit more here:
When I first read this, it really set me off. However, I'm going to try to look at the positive aspects that will come from this - if it actually comes to pass. Many successful investors such as David Swensen preach about asset allocation being the best [statistically-backed] strategy for successful long-term portfolio gains. And thats basically what 401k plans and IRAs are...long-term investments. What percentage of 401K and IRA investors don't have a clue as to how to invest, and simply put their money with the most popular mutual funds? By mandating the purchase of goverment annuities, investors will develop better asset allocation by default [even though goverments backed bonds will get battered with rampant interest rate increases]. Furthermore, is there a chance that this will help suppress tax increases over the long haul?
I fairly ignorant of the subject, in general, therefore I'd appreciate a discussion that's a little more in depth than "OMG THE GOVERMENT SUCKS AND OBAMA SUCKS!"