Capital Commerce

Using 401(k) Plans for Fiscal Stimulus

By James Pethokoukis

Posted: January 23, 2008

Venture capitalist-blogger John Ellis offers up an original fiscal stimulus plan:

Well, it's not mine, actually. It's the brainchild of one Leonard Yablon, my neighbor and friend and the former CFO of Forbes. And it goes like this:

1. Allow individual 401K withdrawals of $12,000 for the next 100 days.

2. Individual withdrawals up to $12,000 will be tax free.

3. The result should be an immediate infusion of $120-$180 billion into the economy.

4. Which should stabilize the markets. There are other plans out there. But the Yablon Plan seems the easiest to get done fast.

I like the Idea!!

I think there should be a cap on the income that you have as to whether you qualify to do it. Maybe less than $75,000 to $100,000 a year to qualify for it. I think 25 or 30 thousand is a better figure for a cap on tax free also. As far as the 500 to 800 check ... it won't buy you dinner in DC so how's it going to help me find a new job or give me the bill money I need to carry me til I find something. And if I'm willing to use my own money to carry myself at this time I don't think I should be penalized for doing so.

Christine of NV @ Feb 21, 2009 11:34:12 AM

Not enough!

I'm not poor, I'm not rich, I'm in the middle! I don't think that 12,000 is enough to help. the amount that should be allowed to be removed, with no penalty - and tax free should be at least 30,000. If someone does a profile of the middle income US tax payers- we are struggling with kids in college, mortgages, etc. We have accumulated a nice 401k but are going in deep debt with school loans and credit card debt. We need our 401k's 30,000 or more to get out of this whole and we can begin spending again. Right now, we stay at home, don't spend anything or go anywhere except to the grocery store to get the basics. We are scared to death! We have worked hard to get here - only to go - OH MY GOD, what happened? HELP US!!!

Kathy Stone of IL @ Feb 07, 2009 08:30:17 AM

Consequences?

Most 401K savings is in the form of stocks and bonds. It's certainly not in the form of unused dollar bills sitting in a vault somewhere.

So what is going to happen when the public tries to sell $120 billion in stocks in less than three months? How will that affect the money supply, and what will it do to the stock market?

Yeah, I know, we're just playing intellectual games here. But if we're going to do that, let's at least be *intellectual* about it.

Kent G. Budge of NM @ Jan 24, 2008 15:22:58 PM

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Capital Commerce

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