BREAKING: Bad news on COLAs for Seniors

[cascadiance]

27. Alan, thanks for doing this!! And another "compromise" you could perhaps help us with...

There are many of us who've lost all of our savings now before we are able to collect social security, and because segments of our economy like the tech sector which is beset by outsourcing through free trade bills as well as "guest labor" programs like H-1B have been having to go in and out of states of being unemployed between short term contracts (the new way of keeping us "disposable" if later they can get the H-1B Visa quota expanded to let them replace us with cheaper labor). For now we're doing a lot of "placeholder" work, and dipping in to our IRA and 401k plans to make ends meet, which will also impact our ability to live under social security later too.

The 10% penalties on IRAs are a situation that most don't think about until we are faced with them after we've already taken them out for the previous year. And the exceptions to let one write down that 10% penalty are so complicated and weird that most of us don't really find ways to accomplish them. Most of us in the situation of unemployment periods would like to take advantage of writing down what we pay in health insurance (COBRA, etc.) in between jobs when we are unemployed that tax law permits. BUT, it is specific in the language that in order to qualify for taking advantage of that tax write-off for lowering or removing that 10% penalty "poor tax", we need to be unemployed at least 12 CONSECUTIVE weeks. Note that isn't "cumulative" 12 weeks that many of us have when we're unemployed multiple times during the year with these short term work bouts and trying to be conscientious of getting reemployed again when ending a job. I discovered too late last year when I was unemployed cumulatively over 4 months, but not consecutively over 2 months.

And these short term jobs often don't have 401k plans either. And if you have an older 401k plan that was administered by a company that you worked at when you were under 55 years old, but now you are over 55 years old, you can't take a withdrawal out of that 401k without getting hit by a 10% penalty either. And if you are just dealing with contract jobs with no 401k, you aren't able to roll your old 401k over to a newer one that would later allow you to withdraw from it without the 10% penalty.

We're being screwed, and these laws need reform to help us pay less taxes, and to not encourage us to stay unemployed for three months or longer consecutively. I would think that Republican congress people would also like to:
1) change laws to take away incentives for people to collect unemployment for 3 months or longer to avoid tax burdens. I'm sure they would like less money being spent on unemployment payouts.
2) change laws to help people save money on taxes (aka the 10% penalties in both examples I cite above).

Now if they don't like to save people money on taxes because they only want to reduce taxes on the wealthy, and such changes wouldn't help that goal, then CALL THEM OUT ON THAT, and show the hypocrisy they have of "wanting less taxes" without qualifying it for the hidden clause "for the rich". I know you'd be good at this, and cornering them to do something that they could champion working together with you to lower people's taxes and reduce government spending on unemployment, and in the process helps so many of us that are being screwed right before we enter our retirement years, with the reduced COLA on social security also about to screw us too!

I tried to get my congress woman to work on this earlier this year, but I think she was too busy voting for TPA (UGGH!!!) earlier this year to do much work in this area.

Thanks for listening to us on DU... I like it when I believe people like you and Bernie Sanders pay attention to what we say here. I still think he might have borrowed an idea I posted a few times earlier on putting in place a war surtax on the top marginal income tax rates to raise revenue on those who should pay it and serve as an incentive to have the rich want to fund wars (and the military industrial complex) less, that might affect how campaign donations are done to politicians and what they want them to do.