The recent article by Gordo on Individual Retirement Accounts was informative. Another, at the SHTFPlan blog was also quite useful. The video linked in the article urges viewers to get out of their dollar-based tax-deferred retirement accounts.
There seem to be two options available for protecting your tax-deferred retirement accounts:
1) Cash out, take the early withdrawal penalty, and pay income tax on the withdrawn amount
2) Create a self-directed IRA entity and transform the account into a hedge against the dollar
The IRS will let you acquire specific gold and silver coin and bullion, but you cannot take physical possession of these assets without causing the early withdrawal penalties to kick in. More info here. If you pre-convert your IRA funds into physical gold/silver, you will at least have hedged against the dollar. When you are confident of when the SHTF event is going to occur, you can then order physical possession of your gold and silver coin/bullion assets, and gear up for the tax hit, and assume the IRS is going to be very, very busy.
Note today's headline about the IRS.
Regards, - Curtis R.
That was a nice IRA article in today's blog. I do quite a lot of advising on IRAs and "Checkbook LLCs". After tax season is over, I will add to that discussion. Advising 98% of layman to go out and get a CBLLC for their IRA is very dangerous - those are very, very easy to muck up, and the penalty for a "prohibited transaction" is that the IRA goes away, resulting in taxation of the entire balance, along with severe penalties. That doesn't mean I am against CBLLCs, very much to the contrary, under the right circumstances, with good advisors and - importantly - clients who heed their counsel. We like using them for real estate. I do think that they are limited where gold & silver are concerned (in a depository vs. physical possession, I do not think CBLLC legally gets around that issue), but I think ammo (probably not a "collectible" unless you are dealing with vintage stuff), to name one example, might be a whole 'nother story. Also, one would want to balance present-day considerations (want to stay legal pre-SHTF) with TEOTWAWKI considerations (penalty for early withdrawal of ammo from IRA may be a minor consideration in certain situations). My consistent experience: IRA "self-dealing" rules are very subtle and very often crossed by laymen with CBLLC control of their IRA, with disastrous results. This is especially true of clients with a strong independent streak who confuse common sense with tax law. Might that describe some of your readers? When clients sometimes say "that's not justice", I respond with "No Ma'am, it's the law and has little to do with justice".
We are seeing much more IRS activity overall, including formation of a new "unit" to look at IRAs. Also seeing more deliberate traps for the unwary, I will provide a few examples post 4/17. To name one: IRS now asks on Schedule E and business returns: "Were you supposed to file 1099s? If so did you?". The trap: Answer "no" or ignore the question, get audited, and 1099 penalties have doubled in the last few years. Answer "yes" when it ain't in fact so - well, now you have committed civil fraud (liar, liar!), big dollar penalties to follow. Just one more deliberate way for the system to extract a toll, err, I mean engage in "revenue raising." Hopefully I can add some value in a few weeks, I think your blog is excellent and I recommend it and your books to many like-minded friends. Your site introduced me and my family to Appleseed, that alone was an invaluable benefit.
Cordially, - J.M.H.
I must mention the potential threat of governments nationalizing your IRA to save Social Security. Other countries have already done this.
The US government has been allowing people to convert their IRA to a Roth IRA for a prepayment fee over two or three years - they really need the money.
The Roth IRA will never be taxed again and you have some fairly good assurances in the way the laws are established. Once you get the IRA over to a Roth you can manage in any way as an IRA and after the specified retirement age, there are zero capital gains.
You can also take any principal contributions back out after five years. This allows you to use for kids college or maybe a rural retreat!
I did this and invested the after fee / tax monies into a privately held business venture that I feel far more confident in being able to keep my finger on the pulse of things. Please note that the conversion has allowed the plan to be open to anyone but historically a Roth only allowed contributions from those making $150,000 or less - so to contribute more in the future would require this level or less of adjusted gross income.
Anyone under the age of 35 or 40 should seriously consider this plan b/c of the enourmous tax advantage of buying in with Zero future taxes. Roth IRAs have also been the plan for the "average Joe" so changing the rules would be political nightmare and there is not much money in them nationaly due to the restrictions and lack of employer plans that offer Roth IRA.