Posted on 05/12/2011 8:25:48 AM PDT by blam
How the US Government Will Seize Your Retirement Account
By Simon Black
May 12, 2011
Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its 'fair share' of private retirement funds.
Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year... a lot of money in a country of only 4.4 million people.
Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7%. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.
It reminds me of what I saw in Bolivia a couple of weeks ago-- there's a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll... obviously not for the maintenance of the road, but to pay the salary of the toll collector.
At the airport, you have to pay an airport tax before departure... obviously not for the upkeep and efficiency of the airport (it took 2-hours to make it to my gate), but to pay the salaries of the guys who collect the airport tax.
This is what politicians consider 'job creation,' yet these positions only serve to destroy value. That they would stick up the retirement funds of hard working people is even more immoral.
Here's the best part, though. If you are a government worker in Ireland, your pension is exempt. They're only going after people in the private work force. It's truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.
Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.
Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.
Think it can't happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, 'legally' allowing politicians to steal retirement funds from the public in order to pay off other debts.
In the US, public pensions have been raided for years, Congress routinely 'borrows' from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt "because we owe it to ourselves--" $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.
Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I'm convinced that politicians have their eyes firmly fixed on the trillions of dollars in private, individual retirement accounts (IRAs) in the United States to fund new spending.
Here's how it will go down:
First, there will be some event... some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.
Bear in mind that most IRAs are managed by boneheads at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management. Your interests and their interests do not align.
As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.
When a big crash occurs, these unhedged broad market positions get hammered the most. Don't worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.
This is when Congress will step in. Citing its desire to 'protect' the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the 'safety and security' of US Treasury bonds. And, just to be on the safe side, let's park them in 30-year bonds that yield 4.35%.
Sound fair? Well who asked you anyways... just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.
This is how US taxpayers will end up being forced to loan their hard earned retirement savings to the government at rates far below any expected inflation.
Right now, there is a window of opportunity to take action; US taxpayers with retirement accounts can set up a special kind of IRA structure that allows you to take control of your retirement savings, and even ship it offshore if you want to, completely legitimately.
After taking control of your IRA, you can do any number of things-- buy and store gold and silver coins overseas; hold foreign currencies in an offshore bank account; buy securities on international stock exchanges; purchase agricultural property overseas, or even a beautiful apartment on the beach in some sunny country.
The possibilities are incredible... but the most important thing is that you get this retirement money off the radar of the politicians before they pull an Ireland and announce some new measure, virtually overnight. These things can happen very, very quickly.
I've talked about this before a number of times, and every time I read the news of yet another country taking this approach, it serves as a reminder to take action.
( You can read more about it here.)
Back in 1993, Clinton’s Secretary of HHS, Donna Shalala, wanted to retroactively tax 401(k)’s to “capture” all the tax money lost to Federal Government. Clinton, not wanting to be a dead cert, slam dunk one term president told her to STFU.
Any legal precedent (not based on Constitutional issues) would immediately be superseded by new legislation. When the Rats are hungry enough they will gnaw on whatever meat is available.
Excellent idea. That’s the way the other side plays. Beat them at their own game....plus it’s a damned good law!
Unfortunately, tens of millions of hard working Americans will be financially gang raped by the government.
So, we'd better hope that there's not any RINO's in the House that like the taste of meat, so to speak, should it come to that.
So what do retirees do? They have spent a lifetime saving and building a portfolio for retirement. They count on those investments paying a small "dividend" to them each month and that is what they will live on during retirement.
So if they turn the whole or most of the portfolio into gold and silver, there will be no "dividend" each month. So what will they live off of? Trading the gold/silver for food, rent/mortgage, taxes will deplete the funds long before they are old enough to die.
I can tell you stories about the things we gave up all our lives while we watched our friends and neighbors all having them (fancy cars, bigger house, luxury boats, expensive vacations and clothes, and on and on) .... so that we could build a nice size retirement portfolio to live off of modestly in retirement and not be a burden on welfare or our kids. Now we face the government just taking it all. What kind of incentive to work hard and save will this leave the next generations?
An "IRA" is designated by U.S. Tax Code, and certain reporting requirements must be made--which is why some investors can actually deduct their annual IRA contributions.
So I don't buy this story one bit--your IRA can invest in most of these things today, even "off-shore" investments. It's just when you diversify, or go to cash out these investments, you can be pretty sure that Uncle Same will want his share of the results.
OK, anyone know how to do what the article dcescribes, without buying the guy’s book?
I guess if all the park service guys all came up missing and our fed govt ceased to exist, complete anarchy; gold would be the read deal; but until then (and I really do believe that scenario is a long ways off) the feds are going to really control Gold. Nice to have a bunch of, deal with friends under the table, but it really doesn't do the long term deal the stock market does for pensions.
I guess what I'm saying is if the govt ever gets serious about stopping everybody from possessing gold, it will be pretty much worthless until the govt collapses.
Maybe I'll be spending my summers out with a dredge in a couple years, but so far easier ways to make a living for us.
Might be better to buy a farm in some foreign country...
>>>So what do retirees do? They have spent a lifetime saving and building a portfolio for retirement. They count on those investments paying a small “dividend” to them each month and that is what they will live on during retirement.<<<
Not to sound unfeeling, but it’s the generation of retirees who utterly refused to address the problems that led up to this who are most at fault for their own problems. They thought they could borrow their way into prosperity when all they were doing was spending *MY* retirement savings in advance. Now the old ba$tards in the Senate will try to raid my savings accounts to please the AARP.
I’m sorry but I’m too busy worrying about the fact that there won’t be any Social Security for myself and now I’m looking at the fact that any 401(k) or etc. I might have saved up for will just be seized by the government. I’m worried about my retirement and forgive me if I don’t give a damn about the people who mortgaged my nation’s future to China so’s they could have nice vacations, big houses, and so they could buy cheap crap at Wal Mart.
They spent fifty years not giving a damn about people like me coming along behind them and I, for one, have no qualms about returning the favor.
US Government Will Seize Your Retirement Account.
Number one reason to keep any extra cash in a safe place (can in basement) if it’s not recorded it can’t be taxed.
“An “IRA” is designated by U.S. Tax Code, and certain reporting requirements must be made—which is why some investors can actually deduct their annual IRA contributions.
So I don’t buy this story one bit”
Lou, I don’t know what this author is selling in this article but you need to get your head out of the sand. Congress writes the laws that you reference, they certainly can re-write them.
There have been some serious reporting on this recently from sites like the American Spectator, etc. Research GRA’s (Guarateed Retirement Accounts in the U.S.)
As late as last fall the US Senate held committee meetings with Economics and Financial Professors about GRA’s. Mark Levin actually interviewed one of the Professors. I could not believe that they are seriously pushing and discussing the confiscation of private IRA’s and 401K’s.
The real reason congress is looking into this is the Union Lobbyists are pushing for congress to enact laws that create GRA’s. If you think the Government pensions are in trouble you need to look at the Union pensions. The Unions want to hand over their pension responsibilities over to the Government GRA’s and let the collective (everyone else) pay for their over promises.
Research it. It is happening behind the scenes.
To the best of my knowledge, there are tax consequences against early withdrawls for tax-exempt retirement accounts. After retirement age, you may do with them as you please.
The idea that a rapacious Government can swoop in and tax the retirement savings of millions of hardworking people, who have planned and scrimped to keep their retirement hopes alive, is appalling. To the ‘rats, it’s just another pile of untaxed (or unseized) money.
This entire idea must be stopped.
Here are just a few sources:
http://www.humanevents.com/article.php?id=39336
http://www.epi.org/publications/entry/webfeatures_testimony_waymeans_20080626/
http://washingtonexaminer.com/op-eds/2010/10/mark-hemingway-unions-target-your-private-retirement-savings
Here is one of the Professor arguments for GRA’s:
http://www.scribd.com/doc/7796877/GRA-Brief-Economic-Policy-Institute
Here is MediaMatters giving the spin/lies (These are not the droids your looking for.)...
http://mediamatters.org/research/201011020040
Probably could talk to the Bush fmaily about that.
Oh, I don't disagree that the government will eventually try to do this. I suppose I should clarify by saying that this author seems to be using small nuggets of a truthful premise--I just disagree that there's much the average person can do about it.
You can invest in gold today within an IRA. You can also put your money in foreign investments. As long as you're invested in an "IRA" however, I don't see how you'll be able to shelter any potential earnings.
If someone is truly fearful they'll lose everything they have to these raving Socialists, they should take every trackable investment today and cash out, paying whatever taxes and penalties that will also come. Then, they should invest in gold, or look into tax shelters outside the United States. Even that's becoming harder to do, as the IRS and other agencies are getting their hands on once-confidential accounts, most likely in the name of preventing terrorism and other national security claims.
I believe you are correct. There will be nothing the average person can do about it. Unfortunately.
I know several people who own and run RV service garages and storage lots. With the cost of fuel and the generally battered economy, you'd think those places would be struggling to keep their doors open. Quite the contrary, they've had to hire additional mechanics.
While the RV dealers with new machines are failing, these repair & refurbish shops are doing a lot of business. People are buying old motor coaches cheap, then rebuilding them. Drivetrain first, then they fix up the inside. That's definitely a sign of people putting retirement cash into something that will retain value and usefulness.
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