Fear of forced IRA investments into US Treasuries
I have a very big bet on Uncle Sam keeping his word about all the trillion of dollars now in IRA’s and other TDSP’s. I’m just 3 years from RMD and I’m concerned about possible new rules. Current government spending is unsustainable and at some point China, Japan, etc. are going to lighten their positions in our national debt.
The 30 trillion or so in our retirement accounts may become a congressional target for selling their treasuries whether we want them or not. There is also the possibility that TDSP’s could be annuitized or withdrawals capped to keep us from fleeing.
I have 45% of my liquid net worth in IRA’s and I’m considering pulling it out all at once and biting a BIG bullet. It’s not in my best interest to do that; but after seeing how healthcare was passed, Obama scares the hell out of me.
Is anyone else concerned that all our long term planning and saving for retirement could be squashed by a real or manufactured financial crisis and desperate government declaring a ‘national emergency’.
Please tell me I’m paranoid. Is there a better way than bailing out now?
Permalink Submitted by Alan Spross on Tue, 2010-03-30 23:41
A better way is simply to keep the accounts intact and/or convert some portion of it to a Roth IRA to shield those funds against higher taxes. Also, keep the investments in your IRAs appropriately diversified geographically and by asset class as well as within an asset class.
While nothing is impossible, taking an immediate tax hit of 40% just to get your funds out of a retirement account only assures two things – an immediate huge tax bill and loss of tax deferral in the future. You would take a certain hit to avoid a “what if” remote possibility, and you still would have the problem of protecting the amount of money you have left after taxes from some other “what if” scenario such as a massive devaluation.