09 06 10 Confiscation of Private Retirement Accounts
By Patrick A. Heller on September 1st, 2010
“The US government plan is to eventually take ownership of all assets in IRAs and 401K accounts and replace them with US government “Treasury Retirement Bonds
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On August 26, the US Department of Labor issued a news release:
It lists the agenda for the joint hearings being held with the Department of Treasury September 14-15, 2010 on what is euphemistically called “lifetime income options for retirement plans.” The hearings are being conducted by the Labor Department’s Employee Benefits Security Administration. I don’t like speaking in tabloid-style terms, but the unstated agenda of these hearings, as I understand it, is to push for the US government to eventually nationalize (confiscate) all assets in private Individual Retirement Accounts (IRAs) and 401K plans!
The US government is desperate to get its hands on private assets to help cover soaring budget deficits and debts, and this is simply the largest and easiest piggy bank that could be seized. The Investment Company Institute estimates that at the end of 2008 that there were $3.613 trillion of assets in IRAs and $2.350 trillion of assets in 401K plans.
For more than the past ten years, I have warned readers that the US government was eventually going to go after private retirement accounts. Considered that as the most important reason to avoid establishing precious metals IRAs. Very few other writers (Ron Holland being one) have picked up on this issue as early as I did. In fact, the mainstream media pretty much ignored the subject even after a House Committee held hearings on the issue in October 2008. Obviously, an outright seizure of assets would meet stiff resistance from the public. So the confiscation will never be described as such by government officials. Expect to see terms such as “retirement income protection” thrown around. It is highly likely that such a program would be implemented in steps to help overcome public opposition.
The US government plan is to eventually take ownership of all assets in IRAs and 401K accounts and replace them with US government “Treasury Retirement Bonds.” In the October 2008 hearings, it was proposed that these bonds pay a 3% interest rate. Another major change is that, upon retirement, the individual’s retirement account would be converted into an annuity. Once the individual is deceased, the individual’s heirs would not inherit anything (similar to what happens now with Social Security “accounts”).
Among the steps that could be taken to accomplish total confiscation are to first make the conversion voluntary, then make it mandatory for only a portion of total assets. The final step would be making it 100% mandatory for 100% of all assets. One idea proposed in the October 2008 House Committee hearings (after trillions of dollars had already been lost in most assets categories) to help push this plan onto the public, was to allow the seized assets to be replaced with government bonds at a face value of a previous higher valuation date. The idea was that a private citizen, who might have lost 20-50% of his retirement asset value, would be much more willing to accept an inferior retirement asset if doing so allowed them to recoup the losses.
Obviously, brokerage companies and mutual funds strongly object to the potential loss of fees they are now receiving for private retirement plan services. The Investment Company Institute, whose member companies manage more than $11 trillion of assets for about 90 million investors, reports that 96% of surveyed households object to the US government requiring that retirement assets only be distributed as annuities. Among the scheduled speakers at the upcoming hearings are representatives from the Investment Company Institute, Fidelity Investments, Putnam Investments, Lincoln Financial, and Vanguard.
These mid-September hearings have to be evaluated in conjunction with the introduction on August 5 of S. 3760, sponsored by Senators Jeff Bingaman (D-NM) and John Kerry (D-MA) to established mandatory automatic IRAs for many workers who are not covered by company retirement programs. If enacted, employers of such workers would be required to pay 3% of compensation into these accounts, which would have the effect of increasing the assets that the US government could then seize.
As recently as my July 27 Coin Update column, I have continued to warn readers to avoid establishing precious metals IRAs-specifically because of this risk of confiscation. I have also long advised that the companies pushing such accounts to customers were giving their customers bad advice.
But, if you already have a precious metals IRA, what can you do now to continue to hold gold and silver as insurance against the decline in the value of other assets? I’m sorry, but I don’t have any perfect solutions. Any legislation is likely to take time before it becomes law. Therefore, while individuals need to begin to plan how to protect themselves, there is no need for immediate knee-jerk reactions.
Among the options to consider are distributing assets from the retirement accounts and paying the respective income taxes on them. In this way, you can maintain custody of most or all of the assets (depending on where you come up with the funds to pay the taxes). However, if you are under the age of 59-1/2, you may be subject to an extra 10% excise tax for taking a premature distribution. As ugly as this option is, which could accelerate tax payments, it is perhaps the best protection against having assets turned into US Treasury debt.
Another possibility is to sell off your precious metals in a retirement account and replace this holding with gold and silver outside of any retirement account. This would preserve your precious metals position, though it would leave other assets at risk of confiscation. For some, it may make sense to see what kind of incentive (bribe) is offered for those who voluntarily convert their assets into US Treasury debt.
Because gold and silver prices have been rising for the past decade, though, there may not be any such benefit available.
If I hear of other good ideas for protecting wealth from what I expect will ultimately be outright confiscation of IRAs and 401K assets, I will pass them along. In the meantime, give serious consideration as to whether it is worth making future contributions to private retirement accounts.
Keep in mind, contemplating confiscation of private retirement assets is a sign of extreme desperation by the US government. By implication, it is a loud warning that the future value of the US dollar is almost certain to be much lower than it is today. Owning gold and silver, outside of private retirement accounts, is now a much more important wealth-protection step than ever before.
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Tom Sanderson
Dec 01, 2014 @ 19:25:50
There are steps you can take, with pros and cons. However, remember the remark of the one poster who warned that, if the money is not in your hands, you don’t own it. Actually, with gold (and silver), even if it’s in-your-hands, at least in theory, the government can (and ultimately will) take steps to confiscate as much of it as possible. Whatever the U.S. government wants, it takes via violence, the threat of violence or retaliatory violence. That’s what a government is……force. As a practical matter, especially with respect to gold, it is much easier to hide it safely and to access it discretely when needed. Never forget that there is no known limit to the government’s inclination to seize private property for their own purposes.
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Oct 04, 2012 @ 12:43:38
Just as I thought – just stumbled across this entry. Thanks for sharing.
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ppjg
Jan 15, 2012 @ 02:14:50
With the rampant theft of estates perpetrated by corrupt probate courts, predatory guardians and immoral and unethical attorneys, the last thing i would recommend to anyone is to do “estate planning”. It just targets you for these vultures.
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Jan 14, 2012 @ 23:33:44
Planning your retirement is one of the most important things that you can do. You need to begin to plan in advance to guarantee that when you do retire you have sufficient funds to last you through the rest of your life.The single biggest obstacle to a prosperous retirement is to delay planning. More to the point though, there are a lot of investment vehicles out there which, on average, are better than the ones consultants endorse.
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Mike M
Nov 11, 2010 @ 20:36:18
Talk about things that could bring about 2nd admendment solutions. This could be one of them. I really doubt the people will fall for this thievery but who knows. I think a lot of people still believe the SS and Medicare trust funds actully have money in them.
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ppjg
Oct 15, 2010 @ 23:22:28
It is my understanding that if you are already actively in the process of accessing your savings, you woud be exempt. A date will be set for the theft of these accounts and several financial planners are advising their clients to take early retirement even in spite of the penalties for early withdrawal. A 5% tax on earnings is planned to cover the theft. In other words, they are going to steal the savings and then tax you to cover the theft. Pretty handy deal if you ask me.
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laura m.
Oct 15, 2010 @ 23:05:31
I’m retired and just started drawing on a 401k; Can anyone tell me if this can be confiscated? Or does it apply only to the current workers when (if) the bill passes? I’d appreciate any info on this, thanks.
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Ann Carlson
Oct 03, 2010 @ 20:22:08
Is the Roth IRA part of this confiscation or do they have some protection for the take over or nationalization.
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Mercedes Geno
Sep 21, 2010 @ 04:42:25
The saddest thing about this thread is that inevitably, someone like the poster below shows up and says how “sad” it is that this was reported. Following the pingback….what a mess! Sadness is the idea that these kind of kooks show up routinely anywhere and everywhere anyone highlights government corruption.
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Sep 21, 2010 @ 00:58:37
Mike Vivian
Sep 18, 2010 @ 17:51:49
Alas, another example of TOO MUCH GOVERNMENT !
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Sep 17, 2010 @ 13:45:48
Saw it Coming
Sep 12, 2010 @ 04:11:53
Obama is just a water carrier for the Feral Reserve and Feral Reserve is the water carrier for the elite fiat-paper-for-real-goods banking families.
I saw this coming in 1994. I cashed out that year and bought real gold, not somebody’s paper presentation and promise of gold. It was $244 per ounce back then at its lowest, I believe. Pulled everything out of the bank, too, and never re-opened an account and never, ever will again.
Mark my words, if it’s not in your hands, you don’t own it.
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ib12541
Sep 11, 2010 @ 12:46:32
Perhaps you could convert your IRA to a Roth then cash it out. I think this would eliminate the 10% penalty.
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Bruce
Sep 08, 2010 @ 20:00:51
I’ve seen in some places where you can use IRA funds to buy real estate or a business. How would that play out, if the funds were used to buy such physical assets as opposed to owning securities? Would there be a lien on the holdings or would they foreclose on me and take the proceeds to buy govies?
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Confiscation of Private Retirement Accounts: US Department « Truth2Freedom's Blog
Sep 08, 2010 @ 19:18:24
james arft
Sep 08, 2010 @ 12:24:30
Wow, and we thought the Labor Department was FOR labor! A more correct label for their group is “The Theft of Employee Benefits Administration”.
Isn’t it time for all writers to provide names and descriptions of attendees to such meetings? Why should evil dooers be able to hide from view?
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john m sandoval
Sep 08, 2010 @ 05:02:10
Heartbreaking, to see Muslim President Barak Hussein O bama proceed with his Socialist/Marxist plans to confiscate individual retirement IRA’s and 401k’s (this September).
Today, I heard that Obama has stopped the “do not call” functions at the telephone companies.
So’ now his political democratic phone callers and organizers can call you and pester you, to ask you, to vote for his Socialist/Democratic political government functions.
And we will be flooded with unwanted Commercial calls.
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Confiscation of Private Retirement Accounts: US Department « Push Back Tyranny
Sep 08, 2010 @ 01:40:00
kornisking
Sep 08, 2010 @ 01:00:19
Cat food never tasted so good !
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