Tuesday, March 30, 2010

10 Steps to Retirement Plan Nationalization

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"Everything out of Wall Street, Congress and Washington promoting the proposed Obama Administration's automatic IRA is all about generating a dramatic increase in tax revenues, saving Social Security and bailing out state, municipal, union and federal retirement plans rather than building real retirement security for productive Americans." - Ron Holland

STEP 1 (Sneak Attack) An Introductory Plan With Minimal Required Contributions

This is the Obama Automatic IRA proposal forcing employers who don't currently offer a retirement plan to be required to enroll their employees in a payroll deduction IRA. Washington will buy off Wall Street, the insurance and financial services industry for this proposal in a public/private initiative offering a government controlled option but providing an opportunity for most participants to choose a private Wall Street/banking funding option.

Research: (new links will be added as circumstances develop)

New Details of Obama’s Automatic IRA Proposal - US News & World Report, pub. 2/2/2010

Retirement Trap Report Counter Strategies*:

5.2.1 Simply Be Aware of the Risks,
5.2.2 An Offshore Self-Directed IRA & Swiss Annuity,
5.2.7 Stop All Voluntary Contributions To Existing Plans

Timing:

My original expectation was a mandatory plan within 1 - 2 years starting some time after the 2010 mid term elections but the Obama Administration actually came out with the initial proposal much sooner than even I anticipated

Revenue Impact For Washington:

Minor Revenue Increase - Workers contributing to the mandatory plan without a deduction will stop or reduce contributions to regular IRAs thus ending the regular IRA deduction and generating more revenue for Washington.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 2 (Forced Universal Coverage) A Mandatory Plan For All Americans

The Washington trap is set! The program is just another forced plan to be placed on top of the current bankrupt Social Security system with universal coverage for all Americans. Most Americans really do need more retirement benefits in addition to Social Security. This is the real problem that will be the bait used to make the program universal which will later confiscate most of the retirement funds from middle and upper income Americans.

The survey below shows that 43% of Americans have less than $10,000 in savings for retirement. This is why most Americans will initially support the universal, mandatory system and how Washington will get away with their plan for stealth nationalization and confiscation of the retirement benefits of Americans with larger retirement plan savings. There is no way to avoid the initial and increased contributions once you are covered under the mandatory automatic IRA but I would be wary of accumulating too much in this plan.

Research: (new links will be added as circumstances develop)

Social Security to start cashing Uncle Sam's IOUs - From Yahoo News, pub. 3/15/2010
Guaranteed Retirement Accounts - From Agenda For Shared Prosperity, pub. 11/20/2007
Most Americans Still Unprepared For Retirement Survey - From CNN Money, 3/9/2010

Retirement Trap Report Counter Strategies*:

5.2.5 Consider Ending Contributions to Your Self-Trusteed Retirement Plans and IRAs,
5.2.9 Begin Now to Reduce Your Wealth in Retirement Plans To the Minimum Possible Level

Timing:

If the Automatic IRA becomes law during 2010 or 2011 and Obama wins re-election, I would expect a forced universal coverage proposal beginning in 2013. If an establishment candidate from the GOP becomes president, then the proposal might come a year or two later.

Revenue Impact For Washington:

Moderate Revenue Increase - With forced full coverage with the automatic IRA accounts, the tax deduction for IRA contributions for the old style accounts will be dramatically curtailed. Less personal deductions means more taxes paid by Americans.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 3 (Disrupt the Current Private System) End the Tax Benefits of Competing Private Plans and Increase the Required Annual Contribution

The annual corporate and personal contribution deductions for all other private retirement plans will be ended. This will cause average worker participation in all retirement plans to plummet and fewer high paid members will remain as the corporate deductions for their participation is fazed out. Congress and the GOP or Democrat President will claim, “the larger retirement plan contributions for wealthy Americans must stop!” All annual tax-deferral for your existing retirement plan appreciation and growth will likely be ended retroactively back to the first of the calendar year resulting in windfall tax receipts for Washington and state governments.

Research: (new links will be added as circumstances develop)

House Democrats Contemplate Abolishing 401(k) Tax Breaks - Workforce Management, pub 10/16/2008.

The goal of ending tax breaks for all retirement plans and IRA accounts has been around for a while and they are just waiting for the opportunity to get the job done.

Retirement Trap Report Counter Strategies*:

5.2.6 For Participants In 401(K) & Qualified Retirement Plans
5.2.8 For Qualified Plan Sponsors - Start Terminating Your Plan While You Still Can!

Timing:

My current forecast is maybe by 2015. Once everyone is covered by the mandatory automatic IRA and forced to make contributions every year, then Washington will move to restrict deductions and tax deferred compounding on older profit-sharing, 401(k) plans, pensions and IRA accounts to create a revenue event each year for the Feds.

Revenue Impact For Washington:

Massive Revenue Increase - Most corporations will end annual contributions to existing plans because of the loss of tax deductions and every participant in a private plan will discover their gains each year create a taxable event for them. For Americans with large retirement balances, the annual taxes on gains will become a new, potentially crippling tax charge each year.
*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 4 (Create A Participant Withdrawal and Plan Termination Event) - A Run To Terminate Existing Retirement Plans

Following the loss of tax benefits Americans will begin to terminate and the rush to get out will probably overwhelm the ability of the IRS to approve the plan terminations. This emergency may well cause a temporary prohibition on plan terminations as stories circulate in the press about highly paid participants withdrawing hundreds of thousands of dollars “in their benefits.”

Research: (new links will be added as circumstances develop)

Electronic Form 5500 Filing Rules May Spark Pension Plan Terminations - IFA Webnews, pub 2/15/2010

Retirement Trap Report Counter Strategies*:

Most Retirement Trap Report readers will already have started early to either terminate an existing plan or to withdraw funds from their qualified retirement plans. Readers should have the time and opportunity to get their distributions or transfer the proceeds to the relative security of an offshore IRA before the extra taxes and penalties are instituted against qualified plans.

Timing:

Maybe by 2016, or in the year following the loss of retirement plan contribution tax deductions and the end of the first year when gains are taxable and Americans discover they have to come up with the extra funds to pay taxes on their plan gains. This will create a rush to get out of retirement plans, starting with a trickle the first year and growing into a torrent by the second year if investors earn substantial gains in the stock market.

Revenue Impact For Washington:

Massive Revenue Increase - The withdrawals and plan terminations will create a massive increase in tax revenues as many Americans who haven't followed our Retirement Trap recommendations start to withdraw their retirement funds. However they will have waited too long and will likely be subject to excess distribution taxes and additional penalties as discussed in the next step.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.


STEP 5 (Washington Halts the Distributions By Locking Up Your Retirement Funds)

To stop the withdrawals Washington will reintroduce the excess distribution tax and increase premature distribution penalties and taxes maybe up to 20% of the distribution. This is in addition to a 10% early withdrawal penalties if under 59 ½, and federal and state income taxes. The Tax Reform Act of 1986 created excess distribution taxes but these were later rescinded however I expect this penalty will return.

Congress will probably make the penalties retroactive back to the beginning of the calendar year whenever this is mandated to generate more revenue. The bankrupt states and cities with income taxes will probably follow the federal example to generate more revenue so the tax rates could be horrendous. While this windfall bonus in government tax revenues will help solve Washington's fiscal problems and short-term revenue needs, the confiscatory level of tax penalties will prohibit many Americans from taking a distribution. The Feds will not want a wholesale collapse of the retirement system even with the hundreds of billions going in each year due to the mandatory contributions as they have other pressing needs for the funds. Much of your retirement funds in the mandatory government plan will be utilized as the "buyer of last resort" for Washington's US treasury obligations when the rest of the world investors have turned their backs on our debt instruments.

Research: (new links will be added as circumstances develop

Retirement Trap Report Counter Strategies*:

By following our recommendations, most of your retirement funds will already have been withdrawn and taxes paid prior to the new excess distribution and premature distribution penalties.

Timing:

This will take place within a year of the above mentioned Participant Withdrawal & Plan Termination Crisis possibly around 2017 or earlier.

Revenue Impact For Washington:

Another Major Revenue Increase - The new excess distribution penalties, plus the existing 10% early withdrawal penalty, together with federal and state income taxes will provide major revenues for the Federal and state governments with income taxes.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 6 (A Market Meltdown and U.S. Financial Markets Close For the Duration of the Crisis!)

- Suddenly and without warning a real or contrived military confrontation or economic crisis could collapse the U.S. equity markets and many Americans will discover over the period that their retirement plan assets have lost 50% to 75% of their pre-crash market values. Washington will respond, "don’t worry your government guaranteed, mandatory IRA or annuity account like Social Security is safe and secure from the crisis." Due to the severity of the financial crisis, the U.S. stock and bond markets could be closed as they were following the 9/11 attack. Then all U.S. investments in the stock and bond markets, money market funds, U.S. annuities and probably even your personal bank accounts could be frozen for the duration of the crisis.

This is when offshore retirement plans and participants should take their distributions with hopefully massive profits from the non-dollar denominated investments outside the dollar and closed U.S. markets. You will, of course, have to pay taxes and early withdrawal penalties if under age 59 ½ on the distributions but having your retirement funds offshore should allow you to get out. After withdrawal and taxes your former retirement funds will become personal investments which are far more protected than if they had remained qualified retirement funds.

Compare this to most American investors frozen inside the closed markets of the American jurisdiction where their personal and retirement investments will be illiquid for the duration of the market closure. All their financial instruments may well be locked up and unprepared American investors will be unable sell investments, buy new investments or take distributions from their retirement plans.

Research: (new links will be added as circumstances develop)

Retirement Trap Report Counter Strategies*:

5.2.4 Build Real Retirement Security Offshore With A Private, Non-Qualified Retirement Program
5.2.2 An Offshore Self-Directed IRA & Swiss Annuity For Liquidity Outside Closed US Markets & Institutions
5.2.14 Guarantee Retirement Funds Liquidity Or Forced Liquidation With Annuity For Life Without Refund Option
5.2.15 Consider A "Distribution In Kind" With an Offshore Annuity Retirement Investment For Ultimate Liquidity

Timing:

There is no way to guess at the timing for the next major stock market correction, crash or closure but it could happen at any time during the next decade. The key is to have a substantial amount of your retirement assets outside the U.S. markets and jurisdiction so you will still have investment and plan distribution liquidity options should this kind of crisis take place.

Revenue Impact For Washington:

A Market Closure Will Lower Future Government Revenues - In fact a serious market crisis and closure will be crippling to future government revenues as retirement fund balances collapse before and after the closure, making future liquidations and distributions far smaller resulting in a serious drop in future government revenues. This is why Step 7 below and Washington's offer of a "One Time Bail Out" will likely follow any serious stock market collapse.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.


STEP 7 (A Deal Too Good To Be True) Washington Comes To the Rescue With a “One Time Bail Out” For Plan Participants

Public anger and financial desperation will intensify and Washington will come to the rescue. They will guarantee your pre-market collapse benefits at their pre-crash level IF you transfer these funds from your private plan to the government mandatory plan you’ve been contributing 5% of your salary to each year. However since the government plan is in after tax dollars there is one small catch. You’ll have to pay taxes on the full amount of your guaranteed benefits before transferring but, don’t worry, the IRS will just take the taxes out of your funds automatically as will the states. This will be a tremendous government revenue generator maybe 40% of the pre-crash total in private retirement plans currently at $15 trillion.

Crazy you might say. Teresa Ghilarducci has already made this proposal back in 2008 before Congress, "Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account--just a one-time swap. . . ." Read "Eyeing Your Pension" in the WSJ below for the entire article.

Still the cost to print more fiat dollars to cover retirement plan losses is almost non-existent when compared to the tax revenues from the bailout and the fact that the bailout benefits will be forced into the participants mandatory program along with the future required annual contributions. Remember future withdrawals from the mandatory program are annuitized over the participants life expectancy and 50% of what remains at death also goes to the federal government.

But behind the scenes another real bailout will take place. Little of the actual money transferred to the mandatory program will be needed by the plan participants due to the payout over life expectancy. Most of the funds will be confiscated to fund the bankrupt federal, union, state and municipal plans as they will also get to take advantage of the ponzi scheme rescue. The excess funds of participants with large balances will be used to fund the retirement benefits of the tax-feeders as they retire.

Remember Washington is guaranteeing to pay you out over your life expectancy so the cost on an annual basis to them is miniscule. Compared to the funds received both in the form of government revenues received in the taxation of the pre-tax private plan funds 40% plus of the assets and in the remaining benefits going to the government after taxes are withheld on the other 60%. These are the funds promised to be distributed tax-free if you have substantial assets here maybe above the $200,000 level, now at $140,000 after taxes. Also remember if you die before your life expectancy, 50% of the remaining benefits go to your beneficiary and the other 50% to the feds. Another windfall of tax revenue.

Research: (new links will be added as circumstances develop)

Eyeing Your Pension, Wall Street Journal, pub 10/23/2008
State Pension Plans Face $1 Trillion Shortfall, Huffington Post, pub 3/16/2010
Hidden Pension Fiasco May Foment Another $1 Trillion Bailout, Bloomberg, pub 3/3/2009
Government Workers Feel No Economic Pain, The Washington Times, pub 3/11/2010

Retirement Trap Report Counter Strategies*:

Little of this bailout will matter to readers of the Retirement Trap. Like all American's you'll be forced into making Automatic IRA contributions just like you do to Social Security but without the income caps. There will be no way out of this. Hopefully though you will have amassed major profits during the crisis and market closure, the funds will already have been taxed (unless IRA's are exempted) and you'll be looking at additional profits when the dollar and treasury obligations tank before, during and after the coming bankruptcy of America.

Timing:

We have no way of knowing when the stock market will collapse but we know the bailout of retirement plans will quickly follow that collapse by necessity in order to trigger a massive revenue infusion to support the Washington federal government.

Revenue Impact For Washington:

Massive Revenue Generator - The bailout to pre-crash levels provides Washington the means to recoup the potential loss of revenues from the market crash immediately as participants to take the Feds up on this offer will have to pay taxes on the new funding bringing their accounts back to even before the crash.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 8 (The Trap Slams Shut and Confiscation Begins!)

Now most retirement plans will have been looted and the funds handled by the government. You’ve lost maybe 40% of your assets already in taxes but like a Roth IRA, the government promises to let you withdraw the funds tax-free over your life expectancy. Should you trust Washington? Only if you're an idiot willing to give your hard-earned retirement savings to corrupt politicians.

Research: (new links will be added as circumstances develop)

Democrats’ Plan to Confiscate Retirement Accounts Sends Panic , from Early Retirement Report, pub 11/11/2008

Retirement Trap Report Counter Strategies*:

Private retirement plans and tax-deferred growth and deductions for contributions will become just a footnote in history. The private retirement system will have been replaced by a mandatory government plan, sort of a second level of Social Security. At least Washington promises you'll receive your Social Security and Automatic IRA benefit from your earlier retirement plans over your life expectancy. The question is will Washington keep this promise after breaking all the others? No! The looting of productive working Americans will just continue but at a faster pace.

Timing:

All we know for sure is total dependence on a government retirement program will follow the bailout which will follow an earlier market crash.

Revenue Impact For Washington:

Substantial Revenue For Washington - Since all of the qualified retirement funds will have gone to fund the retirement for government and union employees, this is quite a savings to unions and the different government entities.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 9 The Real Crisis

The next crisis is a final run on Treasury obligations and the dollar. Much of the treasury debt not purchased by the Federal Reserve will likely be bought by the Social Security administration or a similar quasi government agency which will manage most of your automatic IRA and mandatory retirement plan. There will be some minor dregs of money allowed out to private managers and favored investment firms but the majority of your former qualified retirement funds and IRA assets will be controlled by the government. The former private retirement funds of Americans in the private sector will have become a "slush fund" for the politicians and Washington bureaucrats to use in maintaining their hold over productive Americans working in the private sector.

Like the hundreds of thousands of Germans under Hitler who paid money to the government weekly for a future purchase of a car - the Volkswagen or the People's Car. There the fortunes of war and military defeat meant all the contributions were lost in the war effort. The same thing will happen to the promised government retirement program now starting with the automatic IRA which Washington will later in an economic crisis transfer your existing retirement plan assets into following a real or manufactured market crash.

But this isn't the end of the retirement story for most Americans. There will be one last massive theft and Washington looting expedition targeting the promised but not guaranteed Social Security benefits of all productive Americans but the very poor and favored government "special interest" groups. This is where tens of millions of middle and upper income Americans will find their future Social Security benefits stolen through "means testing" and looted to buy more time for the political elites and favored bureaucrats who will continue to rule over us and steal the results of our productive labor until the final days of the Washington Empire.

Research: (new links will be added as circumstances develop)

U.S., U.K. Move Closer to Losing Rating, Moody’s Says Bloomberg pub. 3/15/2010
China Trims Holdings of Treasury Securities - My Way, pub 3/15/2010

Retirement Trap Report Counter Strategies*:

Many Retirement Trap readers will be protected from the "means testing" theft of their Social Security benefits because substantial existing retirement assets may well be the criteria for losing promised Social Security benefits.

Timing:

Anytime from 1 - 10 years. The coming worldwide run on Washington's treasury debt obligations could happen anytime from today to a decade in the future. It depends on our AAA credit rating and when the debt is downgraded, or when China decides to sell treasuries, or Arab bondholders retaliating in a Middle East conflict, the threat is real and the scenarios are endless.

Revenue Impact For Washington:

Lower Government Revenues - A worldwide run on US treasury obligations and the dollar will be an economic Armageddon for Americans trusting Washington and Wall Street but the investment profit event of a lifetime for others investing in gold, silver and non-dollar denominated real estate, equity markets and currencies like the Swiss franc.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

STEP 10 (Crisis Brings Hyperinflation and Means Testing Out of Social Security) Forces Successful Americans Into Higher Tax Brackets

This will likely be the result as the dollar collapses and much of the government debts are wiped away in the future planned hyperinflation. The much heralded “inflation adjustment” calculations in Social Security and the new mandatory, automatic IRA accounts will not compensate for a future dollar currency collapse and most Americans will be thrown into the highest income tax bracket on any annual income basis as well as annual distributions from their mandatory plans.

“We are now at a point where if the U.S. government taxed Americans 100% of their income, the tax receipts generated would not be enough to balance the budget. Likewise, if the U.S. government cut 100% of its spending including defense, but kept paying Social Security, Medicare and Medicaid, we would still have a budget deficit.” – National Inflation Association

Americans with substantial retirement assets which were transferred into the mandatory program will find their required annual benefit distributions are substantially higher than the average worker. These distribution amounts will begin to “means test” them out of their promised Social Security benefits. In addition, their large distributions will then from retirement plans earlier rolled into the mandatory Automatic IRA program will likely also subject them to an excess distribution tax. This will be equal to regular income tax rates so their future distributions will not be tax-free after all even though they will have paid the taxes due with the earlier One Time Bailout opportunity. Most productive Americans with extra retirement benefits will be in the top tax brackets for mandatory IRA distributions as well as "means-tested" out of their earlier promised but not guaranteed Social Security benefits.

Research: (new links will be added as circumstances develop)

US Hyperinflation Possible By Year 2015 - National Inflation Association, pub 3/12/2010
It's Going to Be Inflation Everywhere - CNBC, pub 3/10/2010
Should Social Security Be Subject To Means Testing? - US News & World Report, pub 3/15/2010
Retirement Trap Report Counter Strategies*:

For Americans following the recommendations in the Retirement Trap Report, their retirement funds will have been liquidated and taxed, years before (except for the future required mandatory contributions for all Americans). You should be able to live like a king in the manner you deserve if you've properly invested outside the dollar and US treasury obligations and taken your plan and IRA distributions when advised.

We hope you will help your American friends and family who trusted Washington until it was too late for them because it will be up to all of us to work together and throw off the Washington tyranny which will have bankrupted the American people and our nation.

Timing:

Again the timing element is difficult to project because the risk of hyperinflation, the global panic to sell and liquidate U.S. Treasury obligations and the dollar.

Revenue Impact For Washington:

Higher Government Revenues & Lower Expenses - Hyperinflation and bracket creep will force all Americans to pay more in taxes while "means testing" middle and upper class Americans out of Social Security will dramatically reduce government expenditures.

*These strategies are explained in detail in the complete Obama Retirement Trap Report. E-mail ron.holland@bfi-consulting.com for a complimentary copy.

This Is Not the End . . .

Is this the end of the story? Americans with substantial private retirement benefits (over $200,000) who transferred into the mandatory plan will find their initial taxes at maybe 40% plus state taxes and the back-end excess distribution taxes will have taken up to 70% of their benefits in constant dollars. In addition Americans with substantial retirement assets will have been "means tested" out of their promised Social Security benefits. Plus hyperinflation could render the purchasing power of guaranteed retirement benefits a fraction of what was expected making the standard of living for Americans who saved well for retirement but trusted the system to be far lower than expected. Welcome to the socialist paradise of America but productive Americans will not remain in this condition for very long!

. . . But Rather The Beginning

This is not really the end of the story but rather hopefully the beginning of a new chapter in the history of the United States of America. It will be time for a new Declaration of Independence and the refounding of the American Dream as was envisioned by our Patriot Founding Fathers almost 250 years ago. Will we learn from our experience? I hope and believe in my heart we will have learned our lesson.

I hope with instant communications and the benefits of capitalism and the free market that we will return to our first national government, The Articles of Confederation. In any case I have confidence in the American people making the best decision for freedom, liberty and limited government once the present chains of control and theft are removed from our nation and people. This is my hope and daily prayer!

Until then I'm flying the Gadsden Flag and warning those who threaten my life and liberty, "Don't Tread On Me." I'm reminded of our original Declaration of Independence, "When in the course of human events..." and waiting for the political revolution which will surely come.

I'm ready. Are you?

- Ron Holland

P.S. If you haven't received a copy of "Escape the Obama Retirement Trap", and reviewed all the protection strategies, please e-mail me at
ron.holland@bfi-consulting.com you'll receive the report by return e-mail.

Take the following steps to protect your IRA or Retirement Plan

1. Contact Ronald Holland if you have questions or comments on retirement planning, your personal situation, or the impending nationalization.

telephone: 866-266.5101 / 843-715-0008
email: ron.holland@bfi-consulting.com

2. Take advantage of a complimentary subscription to the Swiss Mountain Vision Newsletter to stay current on threats to your wealth and economic security. You can subscribe by visiting http://www.bfi-capital.com/mountainvision/subscribe.php(If the link doesn't work just copy and paste the url directly into your browser)

Just enter "Ron’s Retirement Alert" when the form asks "How Did You Learn About Us" and you’ll be subscribed for free.

3. Contact Scott Schamber at BFI Consulting if you would like to receive more information on offshore IRA accounts

telephone: +41-(0)43-366-2200
e-mail: scott.schamber@bfi-consulting.com

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