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The Dem's Evil Plans For Your Money--Second Call

From Fox Business News (video). Scroll down on the home page until you see the video screen. Click on GOVERNMENT PLANS FOR YOUR 401K, mute the speakers through the first 20 seconds or so of the video for the commercials, then turn up the volume.

I wrote about this stuff before--back in November of 2008. Now we're hearing it again, so this makes the second warning call.

The evil plans:

"Basically, Congress is hearing proposals to end tax-deferred retirement savings accounts as we know them, and substituting a government-run Social Security-like account in their place. Apparently they don't think we can invest our own money well enough, and they need our money under their control to use as collateral for more borrowing."

...

"This is going to be one hell of a tax increase for ALL of us--at least $20.5k in added individual income when shelters are done away with ($15.5k for 401k's and $5k for IRA plans). Gosh--I wonder what Congress itself is going to do...oh, wait--they have pensions!

Another thought: you can legally make a withdrawal from retirement accounts to buy your first home--perhaps we can withdraw all of it, and start buying homes in cash with our retirement money. We can all live in huge mansions just to protect our money just like the rich."

Instead of a $20.5k tax increase, it would be more like a $21.5k increase: $16.5 for 401k's and $5k for IRAs (using 2010 figures).

The government wants to use your 401k money to buy bonds to lower the debt by automatically enrolling you in the new Universal Retirement program and investing all your money in government bonds--both old and new money. We knew we were going to have to pay down this debt, but THIS way? Where's the spending slowdown? They think they've found a vast new sea of money to spend, and that it's never going to run out.

John Kerrey is introducing legislation into Congress that promotes this activity--hopefully, it won't get anywhere until November, and he and/or others who back this stupid thing will be voted out.

Plan avoidance tip: if it should come to fruition, plan on shutting down your 401k, shift the money into a self-directed IRA account, then you can access the money to buy cheap real estate (but not to live in). Rental income from those investments will go directly back into your IRA account, as will the proceeds when you finally sell. When you eventually DO retire, or become 59 1/2, you can take a house as an IRA distribution. Sell a house every two years, with the proceeds coming in under $250,000, and the home sale is tax-free.

If you were to do this now, you will profit immensely when the real estate market comes back--perhaps more than if you stayed in the stock market, and DEFINITELY if you chose the government bonds plan. Since this new account is self-directed, you don't have to just buy houses--you can put some back in the stock market, buy precious metals, ETFs, foreign currencies, foreign bonds, and/or foreign real estate. You can even finance a business with one, as long as you don't participate in it directly.

Self-directed IRA FAQ

You can also put money back into your account after distribution under certain circumstances. If Congress made the law, Congress was sure to leave a back door to somehow avoid complying with it.

What to do about the existing employer 401k plan offering, and its tax shelter status? Nothing--according to the proposed legislation, the 401k and IRA plans will now be taxable, so you may as well shuttle off your after-tax contributions to your self-directed IRA by means of an automatic deduction, or by simply sending them a check for the monthly equivalent amount that was going to the 401k or IRA plan. Do anything but keep your money under the employer's wing, where the IRS can get its mitts on it.

There will be more on this subject as I gather information. I myself am deeply interested in this--my own retirement's at stake here.