September 7, 2010 by ppjg
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 IndividualRetirement 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 theInvestment 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.
Full article HERE
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