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Jimmy2008 (< 20)

IRAs and 401ks

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February 01, 2009 – Comments (9)

I am curious what the government could do to our IRAs and 401ks. The Argentinian government confiscated private pension plans last year. People were forced to buy Argentinian treasury. Could similar things happen to our IRAs and 401ks? Could the government tax our Roth IRAs? How likely is it?

I am thinking of cashing out my Roth IRA and 401k for these worries.

9 Comments – Post Your Own

#1) On February 01, 2009 at 8:27 PM, Mary953 (76.45) wrote:

For a start, If you cash out your retirement plans before reaching age 59 1/2, the government can most certainly take a great deal of the money from you in penalties.  Perhaps you should look into other alternatives that are not quite so self-defeating. 

IRA's have been around since Carter's presidency.  At this point, there is a fair chance that everyone who is likely to have worked and saved at all in this country has some form of retirement tied up in one of these (think of these not as people but as votes).  Those who do not have IRA's may have parents that have them.  Those without these specific self-interests could legitimately consider that they will be paying for the retirements of the seniors in this country if our government decides to nationalize or confiscate our retirement funds.  Then we get to the right to bear arms.....

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#2) On February 01, 2009 at 9:53 PM, foolsMeThrice (99.63) wrote:

absolutely agreed.  Laws change like the wind.  Instead of confiscating gold, they could tax your retirement and leave you out to dry.  I really should abandon my 401k, however my company does contribute to it so that's 50% return on my initial investment from the git-go.

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#3) On February 01, 2009 at 10:38 PM, Hudarios (< 20) wrote:

Of course they're going to start taxing Roths and traditional IRAs eventually. I'm actually surprised that the Roth has survived as long as it has, because a tiny initial investment can theoretically grow to a huge amount and then get paid to a retiree years later - all without a penny of tax being levied. I imagine some people in Washington are losing sleep over that.

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#4) On February 02, 2009 at 12:17 AM, bbwyo (< 20) wrote:

so if you cash out your ira what will you do with it?  Recently I have been thinking the same but wonder what other investment would be safer?

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#5) On February 02, 2009 at 1:20 AM, tonylogan1 (28.24) wrote:

Just diversify. If you have 100% of your net worth in your IRA, and none in a brokerage account and none in physical metal and none in real estate and none in foreign countries, then by all means cash some of it out, but if it is a piddly $100k or less, then just stop contributing more than the empoyer match, and start putting some fuinds into one or more of the categories above. If the account is $10k or less, consider just buying a deep freezer and getting storage food, guns and ammo.

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#6) On February 02, 2009 at 1:20 AM, tonylogan1 (28.24) wrote:

Just diversify. If you have 100% of your net worth in your IRA, and none in a brokerage account and none in physical metal and none in real estate and none in foreign countries, then by all means cash some of it out, but if it is a piddly $100k or less, then just stop contributing more than the empoyer match, and start putting some fuinds into one or more of the categories above. If the account is $10k or less, consider just buying a deep freezer and getting storage food, guns and ammo.

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#7) On February 02, 2009 at 5:22 AM, Jimmy2008 (< 20) wrote:

I have both IRA/401(k) and a brokerage acount. I have some solutions to avoid taxes with my gold/silver transactions at present time (another reason dislike GLD/SLV).

As the economy gets worse and worse, the government will sure try to get more and more from us, small people.

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#8) On February 02, 2009 at 8:06 AM, Mary953 (76.45) wrote:

I heard of an interesting use for an IRA about 2 weeks ago (Note that this was a commercial - DO NOT TRY THIS AT HOME)  The announcer was suggesting that you could use your IRA to buy a home Tax Free!  That's right, Ladies and Gentlemen!  The Government doesn't tell you how to invest your IRA.  They merely say that you must Invest your IRA.  So get in touch with our offices and come look at any of our beautiful homes.  Or  we can build to suit.  Our attorneys can help you set up a trust for your IRA (fast talk legalize muttered in background), and you can INVEST in a home with your IRA money and then Rent it to -- Yourself!!  Or Even Better  Hire Yourself to live in the home as a maintenance supervisor and house sitter. 

I promise you - This was real.  Granted it was a 2 minute infomercial in the middle of some weekend cable DIY or cooking or whatever type of show, but someone was actually suggesting that people come look at homes (which, conveniently, they were selling) and plunk down their IRA funds into a limited partnership agreement or trust arrangement which would be arranged by the attorneys retained by the realtors as a way to pay the down payment.  As to the attorneys, I would think that would be a safe venture.  Do the deal, go down the street, and sue them for conflict of interest and legal malfeasance.

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#9) On February 02, 2009 at 10:00 AM, Imperial1964 (98.31) wrote:

By no means cash out your IRA or 401k early.  You will incur a 10% tax penalty.  Then, assuming it is tax-deferred, you will have to record the entire amount as earnings.  What tax bracket do you think that will put you in if you withdraw $100k?  With tax-deferred retirement accounts you are likely to lose half of the money to taxes if you withdraw it early.

If your money is in a Roth IRA you are allowed to withdraw your principal early, but not your earnings.  Once you withdraw it, you can't put it back, except through the usual yearly contributions.

I do not believe the government will try to mess with your retirement accounts.  Simply put, most every voter has an IRA or 401k.  It would be political suicide to confiscate or tax them.

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