G&G Associates Tax & Financial Consulting
Uncle Sam Wants to Seize
Your Retirement Plan
But These 3 Easy Steps Can Help You
Protect Your Hard-Earned Money
Imhotep (Wisdom To You) G&G Readers,
Remember the old posters that read "Uncle Sam Wants You"?
Well, this time, he needs you -- in particular, your money.
The Department of Labor and U.S. Treasury Department are looking into ways to promote the conversion of retirement plans into an “annuity payment.” That, at least, is the term cited by sources like BusinessWeek and Bloomberg.
But make no mistake about it. That’s “government-speak” for the mandated purchase of U.S. Treasuries.
And most likely, the government wants to lock you into a low-yielding 30-year Treasury in order to finance a mountain of deficits for decades to come.
And here's where you -- well, your retirement funds -- come in.
This isn’t the only government move to force the purchase of Treasuries; it was also announced recently that money-market accounts are going to be forced to hold 10% of their assets in Treasuries or equivalents.
You can bet the bank it won’t stop there.
Some of those “equivalents” could include the bonds of cash-strapped municipalities, all offering a fixed return below inflation…that’s right below inflation (means you’ll be forced to work if you don’t have a sound financial plan).
Requirements like these could seriously erode your purchasing power, at a time when you can’t replace it with employment income.
Is it Too Late to Invest Offshore? Not Yet, But it May Be Soon…
It is very clear to me that the current administration wants to stop offshore investing. So, if there were ever a time to get serious about moving your money, that time is now.
In battle, your best chance for successful defense comes from recognizing your enemy’s tactics. The tactics the government is using to capture your retirement plan is the "Pincer Attack," a classic maneuver of double-envelopment.
Here are the two pincers as I see them today:
• The first front is an attack on offshore investing. They would like to close the gates to offshore assets as much as possible and would do this through a variety of legal and tax measures to make it difficult, costly or simply illegal to use retirement funds to invest offshore.
• The second objective is to effectively nationalize retirement plans, or control them enough so they can mandate a significant portion of those funds to U.S. government securities.
If you don’t defend yourself now, you could lose flexibility of investment and even control of your retirement plan.
The Gates are Closing…
Currently, it is legal to take your retirement plan offshore and make non-U.S. investments.
It will be very tough to just flat-out change the rules regarding how you can invest, and the outright closure might take a while.
But, the threat is imminent.
So, how do they stop investors from going offshore? The FDIC announced an audit of all IRA Custodians in 2010. To the best of my knowledge, this has never been done before. (Oh, but they will not and have never audited the Federal Reserve…I wonder why)?
In advance of the audit, they sent out a letter to all custodians addressing areas of concern, including foreign real estate, foreign companies, foreign limited liability companies, and the “risks” of investing in other countries.
Custodians can and do exercise the right to disallow investments at their discretion.
Making offshore investments too costly for custodians is an attempt to force them into no longer allowing such investments.
An even-more-extreme result will be custodians who completely decide to leave the IRA business.
An IOU Where You’re Retirement Money Once Was
Originally, the second attack looked to be the government takeover of retirement plans, as was done in Argentina.
The most important thing is clear: The government wants to force you to buy Treasuries and nothing else!
Imagine that -- 100% of your retirement tied to the dollar, a declining asset, and backed by a government IOU that is already so big many question whether it can be sustained. Now, you see why I’ve been telling readers for the past 3 years to buy Gold & Silver…(Real Hard Assets/Money)…the writing is on the wall folks.
The USD/Dollar is the last asset you’d want to own for your retirement!
What’s more, the timing coincides with the beginning of the retirement of the Baby Boomers. This could create economic strains to an entire generation if they’re limited to such low-yielding investments.
How to Protect Yourself (While You Still Can)
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Defend Yourself Now!
If I am completely wrong about government nationalization, there is really no downside to moving your retirement plan offshore. After all, even offshore you can still invest in everything you own today.
And if I’m right and government does try to keep retirement plans in the U.S. and, as much as possible, in U.S. government securities, you could still be better off.
The logistics involved in trying to force offshore illiquid assets to come back probably doesn’t justify the expense and time involved for the government.
So, the most likely course of action by the government would be some type of grandfather clause on existing accounts. Still, that makes your time limited.
Don’t take any chances – there’s no time like the present to liberate your retirement from the potential clutches of the U.S. government.
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Until the next time!
Asante Sana (Thanks)
Tax & Financial Consultant, RFC
866-361-3872 toll free fax
“Words cannot give wisdom if they stray from the truth."
Ancient Kemetic Proverb
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