Little Mountain
Corporation d.b.a
The
Moneychanger
P.O. Box 178
Westpoint, Tennessee 38486
(931) 766-6066; fax (931) 766-1128
franklin@the-moneychanger.com
http://www.the-moneychanger.com
September 3, 2010
a.d.
Dear Moneychanger Readers:
Following is an article about government hearings to
“discuss” changing over IRAs and 401(k) plans to annuities instead
of being able to draw out the entire amount.
Please note carefully that these are only “hearings”, and
not a new law or regulation. Pat Heller speculates, accurately in
my opinion, what course the government will follow to first tempt
you to convert “voluntarily,” then force you to convert to an
annuity “backed” by government bonds.
This has not happened yet, but this is your warning
shot over the bow. If you have an IRA you must now with all
earnestness consider whether you want to remain partners with
the government, or pay the penalty and tax and get control of your
own assets – all of them.
I have known Pat Heller for more than 30 years and his is
not an alarmist, but a careful researcher and insightful thinker.
Best
wishes,
Franklin Sanders
Franklin Sanders
There are comments on this article at:
http://news.coinupdate.com/gold-price-sets-end-of-month-record-0433/
Liberty Coin Service
September 1, 2010
Commentary on Precious Metals
Prepared for CoinUpdate.com
By Patrick A. Heller
US
Departments of Labor And Treasury Schedule
Hearing On Confiscation Of Private Retirement Accounts
On August 26, the US Department of
Labor issued a news release (http://www.dol.gov/ebsa/newsroom/2010/3bsa082610.html).
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
warned readers that the US government was eventually going to go
after private retirement accounts. I 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 CoinUpdate
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. [end]
Patrick A. Heller owns Liberty
Coin Service and Premier Coins & Collectibles in Lansing, Michigan
and writes Liberty’s Outlook, a monthly newsletter on rare coins and
precious metals subjects. Past newsletter issues can be viewed at
http://www.libertycoinservice.com. Other commentaries
are available at Numismaster (http://www.numismaster.com
under “News & Articles). His radio show “Things You ‘Know’ That
Just Aren’t So, And Important News You Need To Know” can be heard at
8:45 AM Wednesday mornings on 1320-AM WILS in Lansing (which streams
live and becomes part of the audio and text archives posted at
http://www.1320wils.com.
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