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Confiscation of the 401K pension plans

Discussion in 'Coffee Shack (Daily News/Energy/Economy)' started by Kaiser, Sep 7, 2010.



  1. Kaiser

    Kaiser Gold Member Gold Chaser

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    Last edited: Sep 7, 2010
  2. Irons

    Irons Deep Sixed Mother Lode

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    Its just a matter of time Kaiser, a few of the prominant socialist politicians have made comments alluding to this for the past few years.
    Its no secret they want to sieze the peoples life savings.
     
  3. latemetal

    latemetal Gold Member Gold Chaser

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    It would be worth the price of admission just to see the looks on some peoples faces, I cashed out a while back...:biggrin:
     
  4. andial

    andial Sir Midas Member

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    If your having retirement plan problems I feel bad for you son, I have 99 problems but a 401k ain't one.
     
    earplugs likes this.
  5. latemetal

    latemetal Gold Member Gold Chaser

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    Andial, to whom are you speaking?, if its me then please don't worry, I cashed in to buy $6 and $7 silver.:36_2_36:
     
  6. andial

    andial Sir Midas Member

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    Just people heavily indebted to retirement plans latemetal. Not to anyone on this board.
     
  7. 917601

    917601 Mother Lode Found Mother Lode

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    Confiscation? Well, lets first look at the numerous bills introduced to Congress.The sheeple-yes ,you if you do not follow it closely.In commitee, Dharlucci? bill , Government Guaranteed Retirement Accounts (GRA's), and Kerry's recent 401K bill. Outright confiscation not probable, but my bet is GRA'passed and introduced along with Kerry's bill that as it stands today requires mandatory 3-12 % of all 401k contributions must go to US Treasury bonds.Seen the new "R" bonds yet? Oh, and NO DISBURSEMENTS ALLOWED clauses unless you leave your employer or retire (just found that clause in my companies 401K plan-imprisoned money)
    That will be how they do it, not confiscating, rather by imprisoning your money.
     
    keepitlow likes this.
  8. Dude

    Dude Midas Member Midas Member

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    I've got too much going to quit my job just to get at my 401K right now, especially since there will be some fairly high hurdles to force 401K's into such an "investment" program. I presume as a guaranteed option, they may get older investors who are already in less risky funds to move. Of course, it may be set up like SS; if you die, it's over. No leftover balances for your heirs.

    Now if they do force this, I will set up one of my websites, take a picture of the look on my face so you can send the price of admission to my paypal account and gain access. What are you willing to pay, latemetal? Just looking for another cashflow stream. :)
     
  9. Tecumseh

    Tecumseh Silver Member Silver Miner

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    There are always unintended consequences...wall street is already struggling to find new suckers... I mean investors. They pass something like that and watch people start running for the exits.
    If they want to destroy what is left of the capital markets that is all they have to do.
     
  10. Treasure Searcher

    Treasure Searcher Gold Member Gold Chaser

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    Even if the gov't does not outright confiscate retirement plans, there is another guarantee: whatever you withdraw from that plan will be heavily taxed.

    With some states heavily broke, you not only have to worry about the Federal Government taking a chunk, the states will have sharp teeth and will take their share, too.
     
  11. Dude

    Dude Midas Member Midas Member

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    If I have to take mine out in the near future, it will be because of hardship (ie, no income), so there will be little to no tax and of course Texas has no income tax. If I take it out in later years, I'll be happy I have it. If I'm still in a higher income bracket who the heck cares - except for something to complain about while dining on lobster. Of course, if I bypass the 35% now and earn a meager amount as a retiree and they suck 45%, yes, then I lose. If that happens, however, half the US will probably have died of starvation (or at least be living in mud huts), IMO.
     
  12. Treasure Searcher

    Treasure Searcher Gold Member Gold Chaser

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    Hopefully you live in a state that has no or little income tax. Those states that are broke (California, etc.) are going to tax retirees literally to the grave. Its probably better to have a retirement plan and have it taxed, rather than have no retirement plan at all. Then again, those that have a retirement plan will be taxed to support those without a retirement plan.
     
  13. 917601

    917601 Mother Lode Found Mother Lode

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    US Departments of Labor and Treasury Schedule Hearing on Confiscation of Private Retirement Accounts
    By Patrick A. Heller on September 1st, 2010
    Categories: Featured Articles, Gold and Silver Commentary, Precious Metals

    On August 26, the US Department of Labor issued a news release (http://www.dol.gov/ebsa/newsroom/2010/ebsa082610.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 have 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 “accountsâ€).

    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.

    Update 9/2/2010 - See the next column for additional information and responses to comments.

    http://news.coinupdate.com/us-depar...iscation-of-private-retirement-accounts-0431/
     
  14. 917601

    917601 Mother Lode Found Mother Lode

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    Watch closely,all exits closing.What if (as currently proposed) 401K' s are turned to ANNUITIES (as my company recently did to our "cash balance lump sum)-no more "lump sum"-now only available at 62 and at $237 /mo.You seem to not understand the scale of "CHANGE".My company has done it, what makes you think yours will not, AND the US Govt will not?
     
  15. Treasure Searcher

    Treasure Searcher Gold Member Gold Chaser

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    I have read a statistic that 41% of US Gov't spending is derived from borrowing. That is a large chunk of the money being spent. Would the Federal Gov't announce it is going to stop spending 41%??? Not likely. Gov't spending is what keeps politicians re-elected.

    As long as suckers ("Savings" Bonds buyers, Treasury Debt buyers, etc.) keep buying this debt, the ride is great. Once the debt buyers say no buying, then the music stops.

    I also read an interesting article today on how municipal bonds are getting the cold shoulder from US investors. Therefore, the bonds are being peddled to foriegn buyers (Europe, etc.). Once those foreign buyers get wind of city/county/state bankruptcies in the US, then those bonds will be shunned, too.
     
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  16. Dude

    Dude Midas Member Midas Member

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    So you are saying that your corporate sponsored 401K now has no lump sum option if you leave your job? What financial institution is your employer using?
     
  17. Tecumseh

    Tecumseh Silver Member Silver Miner

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    Don't get me wrong - I think that we all have to worry about this and work to elect legislatures that respect private property but these threads become nothing more than rumor mongering.
    It sounds like the poster's company had a cash balance plan - which is actually a defined benefit plan - not a defined contribution plan. (meaning the poster did not even fund it - his company did). What is nice about those plans is that you bear no risk of market loss until you take the money out because of a qualifying event (separation from service or retirement). As far as I know those type of plans are required to offer a lump sum option.
     
  18. 917601

    917601 Mother Lode Found Mother Lode

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    The major airline.The "lump sum" that was promised if leaving the company will now (announced in July) only be paid out in monthly payments at retirement age-59 1/2 .It was approved by govt regulators (it obviously was broke although they never stated it was out of money.) It has in effect been turned into an annuity-a move many defunct plans have moved to.
     
  19. Irons

    Irons Deep Sixed Mother Lode

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    They cannot pay back the money that was put in by the workers because they blew it, it no longer exists. It is now half built buildings and empty condo's in Dubai.
    6-8 months after I cashed out my 401k, Principal announced it will no longer allow you to cash out until age 59 1/2 whether you leave your job or not.
    The folks I used to work with are screwed, unemployed and getting a nice statement showing thier money they can't have.

    If everybody wanted to cash out thier 401, 403 or IRA tomorrow most would find out there is no money there anymore.
     
  20. platinumdude

    platinumdude Gold Member Gold Chaser

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    So far no confiscations. 401ks are safe.
     
  21. mcmurph

    mcmurph Seeker Seeker

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    Stealth confiscation through inflation continues unabated.
     
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  22. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    Last edited by a moderator: Dec 26, 2015
  23. Fiat Metaler

    Fiat Metaler Gold Member Gold Chaser

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    i think they will do this gradually. first they'll mandate that the trustees of the plan commit a certain percentage to "safe" assets - issued by Uncle Sam only of course. Dodd Frank prohibits reliance on credit ratings, so you can't say that Coca Cola is "safer" than Uncle Sam anymore (since you can't look to the bond rating). then they will increase the taxes and penalties on withdrawals, effectively locking that capital in the 401k.
     

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