Clinton-GRAP: The Proposal

Not as catchy as Obama-Care but when the Clinton people, specifically Teresa Ghilarducci, remake the retirement system in this county it will be based on the Guaranteed Retirement Account Proposal which has had a number if incarnations over the years:

The most recent version which could become reality next year has these primary features (as excerpted):

    • Require all businesses with over five employees to provide a pension or the GRA
    • Mandated 3% savings [on salary up to $250,000] between an employee contribution and an employer contribution
    • For employees, the 1.5% contribution would be offset by a new $600 federal tax credit—essentially covering the contribution for households below median income.
    • The cost of the employer’s 1.5% contribution would be substantially offset by ending burdensome workplace administration of existing retirement plans.
    • Each person’s guaranteed retirement account would be legally owned by the specific individual. But that money would be invested as part of pooled strategies, combining the retirement savings with other GRAs across the country. Individuals would be able to choose their own manager from a national exchange.
    • At the time of an individual’s retirement, the federal government would guarantee that each individual has earned a minimum return of 2%….The government could charge a modest insurance premium to cover this cost if desired.
    • Automatically annuitizing everyone’s accumulated savings when they retire or become disabled.
    • Affluent retirees who receive an income of at least $250,000 from sources other than their GRA in a given year would not be eligible to receive that year’s GRA annuity payment. Instead, they would be entitled to deduct the amount forgone from their other taxable income that year.

I have basically already made up my mind about GRAP but welcome your opinions and alternatives. But first, another excerpt that may be of interest to those of you out there who make your money by being part of that ‘burdensome workplace administration of existing retirement plans”:

By ending the more than $100 billion in federal tax deductions for defined contribution plans—deductions that disproportionately benefit the wealthiest Americans—the government can provide much fairer support for retirement savers.

11 responses to this post.

  1. Posted by Anonymous on November 6, 2016 at 9:27 pm

    Might be useful to see Trump’s plan so the two can be compared?


  2. Posted by steve on November 6, 2016 at 9:27 pm

    Another shell game – why just not wait until all the baby boomers are dead and then it will fix it self—–oops I for got that they will be replaced by refugees and the (sic) under served—–ps–you still need to be employed—–tuesday will tell


  3. Posted by Anonymous on November 7, 2016 at 8:13 am

    Not clear if smaller businesses with 5 or more employees or any business will be forced to participate or can employees opt out? Am I understanding correctly that businesses will be forced to match and employees will be forced to have the deduction or can one opt out?

    Also, where would this leave all of those “burdensome” administrative positions of those who manage existing retirement accounts? Unemployment line?

    …and why on earth would any one trust the government with their money or retirement?


  4. Posted by steve on November 7, 2016 at 9:11 am

    When is a tax not a tax?——-this trend is just a set up for a fed smash and grab just like the states have done—using the word trust and government (with public money) in the same sentence just creates a gag reflex


  5. Posted by eric blair on November 7, 2016 at 11:24 pm

    Correctly or incorrectly, I interpret the Ghilharducci/James proposal as a plan to nationalize all of the private retirement accounts in the US.

    On page 14 of the document the authors state in part that “Under the Retirement Savings Plan (the “RSP” or “Plan”), all those who don’t have access to a workplace pension plan would be enrolled into a Guaranteed Retirement Account (“GRA”)—and those with 401(k)-type and all other plans would roll their savings over to a more suitable GRA. This includes part-time and self-employed workers.”

    This strikes me as a blueprint to forcibly convert legacy IRA/401K accounts to GRA annuities.

    On page 21 of the document the authors state that “Pre-annuitization GRA accounts would be inheritable by the spouse. After annuitization, which occurs on the household level, the annuity would already reflect longevity assumptions and would not be inheritable.”

    In short, you could not leave your IRA/401K to your heirs under this plan.

    This proposal, if implemented, would be the single largest confiscation of private property in American history, all in the name of retirement “security”.


  6. Posted by MJ on November 8, 2016 at 8:43 am

    Best to follow it closely, and take out all of our monies and pay the penalties….stick under the mattress and live frugally


  7. […] proposal was pushed before the 2016 election and is now a book with a plan to expand Social Security in a way that the financial community can […]


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