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Will Uncle Sam Takeover Your IRA?

Posted by Larry Doyle on February 19, 2010 11:06 AM |

Is the launch of government sponsored annuities a precursor to the formal takeover of your retirement accounts by Uncle Sam?

The groundwork for this possibility is being laid by the powers that be in Washington. Will it come to fruition? Only time will tell, but did you think developments over the last 18 months would ever happen? While we can hope for the best, we should prepare for the worst — including the potential reality of having Uncle Sam take control of your retirement accounts.

I thank a loyal Sense on Cents reader, Comrade Joe, for initially broaching this topic here on January 11th in writing, Blueprint for Government Takeover of IRAs.

We have seen further evidence of this potential reality in a BusinessWeek article in late January,  Mandatory IRAs May Burden Small Employers, Business Group Says:

U.S. President Barack Obama’s effort to increase retirement savings by requiring all businesses to offer automatic IRA accounts may face opposition from small companies, says a Washington-based trade group.

Obama said the plan, part of a tax package aimed at middle- income Americans proposed today, would let employees automatically enroll in direct-deposit retirement accounts and expand matching tax credits. The administration hasn’t released a cost estimate.

“When small businesses are struggling to stay afloat, we oppose mandates such as this that stand to create a new administrative burden,” said Molly Brogan, vice president of public affairs for the National Small Business Association, in an e-mailed statement.

When I see the term mandate connected with a government initiative, I get very concerned. Who else is concerned and has been for a long time? Ron Holland. Ron writes, The Coming Obama Retirement Trap Has Started:

A Personal Note from the Author

“What is certain is that out-of-control spending will continue, and meaningful benefits for those on Social Security will have to be funded from somewhere. My guess for the most likely future source is a wealth tax on the retirement accounts of those who have distrusted the word of the Federal Government to pay benefits, but who have curiously trusted that same government with regard to retirement account security.” Thomas M. Schmidt

Dear Concerned American:

I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation. “He who has his thumb on the purse has the power.” – Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor.

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck’s death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany’s military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse.

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is “what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?” Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

How do you start to protect your assets?

Listen this Sunday evening from 8-9pm as No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Ron Holland.


To listen to an audiotape of this fabulous discussion with Ron Holland, click here.

  • divvytrader

    I think Americans are free to use IRA money to invest in offshore funds ….. no ? Might be time for folks with significant IRA holdings to start getting it out of USA …. before you find they cut that off too .

  • LD


    While markets have rebounded there are significant risks, both old and new, under the surface.

  • Future Aviator

    I am thinking of cashing out my retirement funds and starting a flight school . . .

  • Dan Jamieson

    Why the fears about a takeover?? The idea of automatic IRAs has been well received.

    Here’s what the BusinessWeek story says about the proposal:

    The accounts would likely be Roth IRAs where taxes are paid upfront to lower the budgetary cost rather than taxing withdrawals during retirement. Employees would be able to opt- out of the savings program, John said. (said David C. John, who developed an automatic-IRA proposal with Mark Iwry, now deputy assistant treasury secretary for the Retirement Security Project, a joint venture of Georgetown University’s Public Policy Institute and the Brookings Institution in Washington.)

    Investment Limit

    The automatic IRA may have the same annual investment limit as existing IRAs, which is $5,000 for savers under the age of 50 and $6,000 for savers 50 and over, John said. An employer would have access to a Web site created by the government that would help them find a bank, brokerage firm or mutual fund company to administer the accounts.

    • LD

      Let’s see another retirement vehicle in which the taxpayer pays up front for the benefit down the road. Sounds like Social Security.

      Are we supposed to blindly trust the government to manage these funds?

      I would much prefer to manage my retirement fund myself. I think the majority of American citizens would also prefer to have control over their funds, rather than ceding control to Uncle Sam.

      • Cherie

        The govt. can’t manage money or social security. Why would I trust them to manage the retirement savings that I have worked a lifetime to carefully save? I don’t and I won’t. I am looking into whatever alternatives there are for removing/rolling over so I don’t lose everything we have worked for.
        We are considering foreign investments, moving to a foreign country after kids are out of school and other options. We are fed up with the American govt.

        • Bill

          Even if you move to some other country,
          you will be taxed in the US on your income.
          Only way to avoid that is to renounce
          one’s citizenship and become a citizen of
          some other nation. But at that point you
          must cash out any deferred retirement
          plan, such an IRA and pay tax up front
          on the entire lump sum.

  • Patriot

    Looking forward to this show!!!

  • Bill

    I never trusted the government on the
    Roth IRA alternative. I figure they’ll
    tap into that somehow. Probably require
    you to include the income in some fashion
    such that you don’t actually pay tax on
    that part of your income, but it kicks you
    into a higher bracket, so you wind up
    with a higher marginal rate. There’ll be
    some gimcrack, just watch. I also
    keep looking for a grand plan to just
    roll all the retirement plans, IRAs, etc.
    into one big pot that everybody gets to
    pull from, whether they contributed a red
    cent or not. After all, the ones that
    were able to save that money probably stole
    it. That would be a real vote getter
    from the deadbeat foreclosed on class.
    Course, that won’t apply to Goldman
    Sachs and UAW plans.


  • Comrade Joe

    followup: Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare’ for Some – By Zoltan Simon – Hungary
    is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension. – … “This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.” … – Bloomberg

  • Gail

    Are ALL government officials giving up their IRA’S????
    I sincerely doubt it.

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