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... The big money manager - Blackrock (many of you probably have retirment funds being managed by Blackrock) - has been accumulating a giant position in Italian Government bonds. ... If you have retirement funds being kept by your advisor or pension plan at Blackrock, you might want to think about liquidating your account and getting the money out before Blackrock turns into the next MF Global times 100. I'm not kidding about this.
Finally, the IRAs and 401k's are at risk for an "Argentina style" .gov plucking.
Disclosure: I closed my IRA in late 2008, paid my penalties and taxes, and bought physical GOLD with much of the remainder.
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Finally, the IRAs and 401k's are at risk for an "Argentina style" .gov plucking.
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Can you expand on your assertion above? Tell me more, please.
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Hemmed in by the global financial squeeze and commodities slump, Argentina's leftist government has seemingly found a novel way to find the money to stay afloat: cracking open the piggybank of the nation's private pension system.
The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade.
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THE GOVERNMENT WILL use the last €5 billion in the National Pensions Reserve Fund (NPRF) to help create employment although it will need approval from the International Monetary Fund (IMF) and Europe before doing so.
The Sunday Times reports today that the money will be used by the government to create as many as 80,000 jobs in Ireland. The paper cites government sources in reporting that the use of the money would be seen as more viable then the proposed sale of semi-state assets in the current weak market.
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The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are leading the effort.
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Last month, I discussed why I'm not as excited about Roth IRAs as many people who write about consumer finance: I don't believe that the government is ultimately going to be able to keep it's hands off a pretty big pot of money. Getting a tax break now in your 401(k) or traditional IRA is guaranteed; getting a tax break in the future is not.
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As Congress squares off over a debt ceiling vote, Treasury is scrambling to find cash in the couch cushions. One of the ways it will scare up extra money is by putting off saving for the retirements of federal workers — in effect, short-term “borrowing” from public pension funds.
By suspending investments into the civil service retirement and disability fund, as well as putting off reinvestments into another big retirement bucket known as the G-Fund, Treasury could “claw back” up to $202 billion, estimates Reuters. That sounds like a lot, but it’s just 10 percent of the $2 trillion the agency says it needs to stay afloat until after Election Day 2012, and it will have to be put back.
Holding off public pension payments could be cast as prudent short-term scrambling to avoid a serious problem with U.S. Treasury holders. Taken another way, such moves could instead be seen as the first step toward an eventual tax or outright seizure of private savings in tax-favored retirement plans.
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Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.
A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankruptcy.
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So, if they seized all 401-K money, they could pay off the debt and start over again. That would, however, cause a revolution, which I believe they are trying to avoid. One thing they could do is allow those who are above a certain age, say 50 or so, to dip in to their funds but only impose a modest penalty of three or four percent. I suspect that hundreds of billions of dollars would then be disgorged and used, and the GovCo would have instant revenue, as they could require payment of estimated taxes at the point of withdrawl. This would allow them to pull some tax money forward, which buys them some time, but doesn't immediately appear to be outright confiscation or looting.
A recent hearing sponsored by the Treasury and Labor Departments marked the beginning of the Obama Administration’s effort to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans, NSC is warning.
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Good post.
Can you expand on your assertion above? Tell me more, please.
Also, I'm interested in this idea:
How did this work out for you? Did you have a ton of tax to pay?
Vox - I cashed in all mine over 10 years ago. I did it strategically then but still, paying the tax is less of a loss than losing it all.
Besides, you still pay tax whenever you do take it out and tax rates never go down, they always go up. Retirement funds are one of the most misunderstood (by the average person who invests in them) investments of all. You do not get out of paying taxes, you only DEFER paying them.
I 'saw the light' long ago and acted. And yes, I am glad I did.
Jay - that's the same article that I mentioned in post #12.
... The IRA confiscation movement started at least during, if not before, the Bush administration. Four years before the recent hearing sponsored by the Treasury/Labor Dept, there was a Congressional hearing On October 7, 2008 sponsored by the House Education and Labor Committee at which pension reform academic Teresa Ghilariducci presented a paper on her Guaranteed Retirement Account program. Her idea is to replace IRA/401k accounts with a Government administered program which would provide retirees with a guaranteed annuity stream annuitized by good old U.S. Treasuries.
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This movement to de facto seize your private retirement plan was started years before Obama was even a local politician in Chicago. Regardless, once these movements begin in the Government they happen slowly and then all at once (sound familiar?). Anyone with two operational frontal lobes will do what I did 6 years ago and cash out their IRA, pay the 10% penalty plus any income tax for that year on the proceeds and put the money into physical gold and silver outside of the system. Over the next 4-5 years you will more than make up for the 10% penalty/taxes with the appreciation of the bullion AND your wealth will be safe from the Government. Capito?
I don't know of this is new news or not, but according to an accountant buddy on the federal-government level, "the pensions of federal employees have already been collateralized and replaced with IOUs." Those were his exact words.
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Treasury Secretary Tim Geithner has informed members of Congress that, with the U.S. government reaching its $14.3 trillion debt ceiling Monday, his department will have to turn to a string of last-resort measures so that the government can keep paying its bills. At the top of the list is a plan to suspend investments to two government employee retirement funds, while borrowing from one of them.
Geithner stressed that the move will not affect federal workers and retirees and that the accounts will be "made whole" once the debt limit is increased. But he ratcheted up his call for Congress to take action soon.
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I don't know of this is new news or not, but according to an accountant buddy on the federal-government level, "the pensions of federal employees have already been collateralized and replaced with IOUs." Those were his exact words.
Old news. It's what kept government running during the last stand-off over raising the debt ceiling. Timmy had to raid government pensions after the debt ceiling was reached. This was widely reported in the MSM: ...
The Treasury on Tuesday started dipping into federal pension funds in order to give the Obama administration more credit to pay government bills.
"I will be unable to invest fully" the federal employees retirement system fund beginning Tuesday, Treasury Secretary Timothy Geithner said in a letter to Democratic and Republican leaders in Congress.
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Geithner said Treasury started suspending reinvestments in a federal pension fund known as the G-Fund -- a tool Treasury has had to employ six times over the past 20 years in order to keep the country below the statutory debt limit.
The Treasury Department has already tapped another seldom-used fund in order to allow the government to continue borrowing without running afoul of the country's laws.
The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.
“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.
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http://www.bloomberg.com/news/2013-...ounts-draw-u-s-consumer-bureau-attention.html
"We're from the government. We're here to help you."
How many times have you read financial-advice stories lecturing you to max-out on your IRA, save as much as you can in your 401(k), and even pay taxes now to change your regular IRA into a Roth IRA that will be tax-free until you die?
Well, be careful how much you save.
That's the message in President Obama's budget for fiscal 2014, which for the first time proposes to cap the amount Americans can save in these tax-sheltered investment vehicles. The White House explanation is that some people have accumulated "substantially more than is needed to fund reasonable levels of retirement saving." So Mr. Obama proposes to "limit an individual's total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013."
Thus do our political betters now feel free to define for everyone what is "needed" for a "reasonable" retirement. ...
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Amazingly, Mr. Obama has surveyed the economic landscape and somehow decided that it's time to discourage savings if you make more than he thinks is "reasonable."
Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
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Soon to come to our shores. Congress has been eyeballing the trillions of dollars in private pensions and private 401-K accounts for some time now. If this huge pile of cash were transferred to the Treasury, we would [on paper] eliminate all public debts and offload all those treasuries to the pension slush fund. In one fell swoop, we would regain total global monetary hegemony.
Social Security and other entitlements are programs in big trouble (unless they hyperinflate).
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