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Thread: Are 401K's safe?

  1. #1

    Default Are 401K's safe?

    What do you think the chances are that 401Ks (or any retirement account) gets raided when the dollar starts to crash? I think it's a numbers game. A lot of voters with retirement accounts would get seriously pissed off. On the other hand an even greater number of voters will have their government handouts reduced if we don't raid retirement accounts.



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  3. #2

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    I think it is likely that IRAs and 401ks will, by increments, be pushed into government bonds "for your protection". The banks, who administer those accounts will comply instantly. And by the time most people realize they have been ripped off, it will be too late to do anything about it.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  4. #3

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    Define "safe".

    When the US Dollar crashes. and IMF (or whoever) takes over,, they will do whatever they damn well please.

    The money is all fake anyway.
    Liberty is lost through complacency and a subservient mindset. When we accept or even welcome automobile checkpoints, random searches, mandatory identification cards, and paramilitary police in our streets, we have lost a vital part of our American heritage. America was born of protest, revolution, and mistrust of government. Subservient societies neither maintain nor deserve freedom for long.
    Ron Paul 2004

    Registered Ron Paul supporter # 2202
    It's all about Freedom

  5. #4

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    I still have some in mine ,have closed out the Mrs. , but safe ? No , I do not think so.

  6. #5

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    It's already been proposed. Cash out.

    Nothing is safe from this desperate, insatiable, all-consuming govt. Nothing. Not your life, not your liberty, not your property.
    Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
    --Albert J. Nock

  7. #6

    Default

    Quote Originally Posted by Madison320 View Post
    What do you think the chances are that 401Ks (or any retirement account) gets raided when the dollar starts to crash? I think it's a numbers game. A lot of voters with retirement accounts would get seriously pissed off. On the other hand an even greater number of voters will have their government handouts reduced if we don't raid retirement accounts.
    The liberals have already started pushing to take the money. There have been Senate hearings on the topic. Once they get an idea, it's only a matter of time until they succeed in implementing it.
    * Enforce Border Security – America should be guarding her own borders and enforcing her own laws instead of policing the world and implementing UN mandates.

    * No Amnesty - The Obama Administration’s endorsement of so-called “Comprehensive Immigration Reform,” granting amnesty to millions of illegal immigrants, will only encourage more law-breaking.

    * Abolish the Welfare State – Taxpayers cannot continue to pay the high costs to sustain this powerful incentive for illegal immigration. As Milton Friedman famously said, you can’t have open borders and a welfare state.

    * End Birthright Citizenship – As long as illegal immigrants know their children born here will be granted U.S. citizenship, we’ll never be able to control our immigration problem.




    Reprinted from http://www.ronpaul2012.com/the-issues/immigration/ [Nov. 29, 2011]

  8. #7

    Default

    Quote Originally Posted by oyarde View Post
    I still have some in mine ,have closed out the Mrs. , but safe ? No , I do not think so.
    When you say "closed out", you mean you paid the 10% penalty in addition to the taxes?
    "Sorry, fellows, the rebellion is off. We couldn't get a rebellion permit."

  9. #8

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    I think you're safer with an AR-15.
    We have allies many of you are not aware of. Watch the tube. Show this to your 30 and under friends. Listen to it. Even if you don't like rap, it has 2.7 million views.

    http://www.youtube.com/watch?v=kmBnvajSfWU#t=0m16s

    Cut off one min early to avoid war porn.

  10. #9

    Default

    One person testifying at a Senate hearing proposed the idea which was immediately shot down (though some like to suggest that it is bigger than that and maybe a done deal- it is not). IRAs and 401ks are not going to be seized. Will their value move up and down and be risky for that reason? Yes- all investments will do that.

    If the dollar is worthless then all things denominated in dollars -all bank acounts, and investments like IRAs and 401ks- will also be worthless so there will be nothing to "seize" anyways.

  11. #10

    Default

    Quote Originally Posted by Tod View Post
    When you say "closed out", you mean you paid the 10% penalty in addition to the taxes?
    I thought the penalty ends up being like 20% or more. Additionally, cashing out means losing future employer contributions (and I thought I would have to quit my job too - not gonna happen). Maybe Acala is correct, they might incrementally push people towards "safe" investments that favor TPTB. But raising taxes would be the easiest way to get 401 money.

    More so, the 401 is tax deferred so cashing out now will increase the war chest. Maybe in 40 years we will have come to our senses or the fake money is all gone as pcosmar suggests.

    For now, I'm happy with my hands, and Uncle Sam's, off that account.

  12. #11

    Default

    Quote Originally Posted by Tod View Post
    When you say "closed out", you mean you paid the 10% penalty in addition to the taxes?
    That could be expensive. Say you had $10,000 in one. Ten percent penalty knocks you down to $9000 and then it counts as ordinary income for you. If you are in a 25% tax bracket, you could lose another $2500 (not sure if the tax applies to amounts before or after the penalty is applied) or $2,025 which would drop your $1000 down to about $6500. They keep 20% as withholdings against the taxes. You just lost $3500. Now if you wanted to put that into a different investment, it would have to go up by 46% just to break even (ignoring costs of the new investment) with what you had in the 401k (to get the $6500 back up to $10,000). That is a big return you need. And that assumes that the 401k didn't grow at all in that time- otherwise you need even more growth to simply break even with keeping the account.

    If you are seriously worried (and I am not), I would not close the account but perhaps put any new money into something else and leave the money you already have in the 401k.
    Last edited by Zippyjuan; 08-14-2012 at 01:01 PM.

  13. #12

    Default

    Quote Originally Posted by Zippyjuan View Post
    That could be expensive. Say you had $10,000 in one. Ten percent penalty knocks you down to $9000 and then it counts as ordinary income for you. If you are in a 25% tax bracket, you could lose another $2500 (not sure if the tax applies to amounts before or after the penalty is applied) or $2,025 which would drop your $1000 down to about $6500. They keep 20% as withholdings against the taxes. You just lost $3500. Now if you wanted to put that into a different investment, it would have to go up by 46% just to break even (ignoring costs of the new investment) with what you had in the 401k (to get the $6500 back up to $10,000). That is a big return you need. And that assumes that the 401k didn't grow at all in that time- otherwise you need even more growth to simply break even with keeping the account.
    This is the correct math for the most part (consider what portion is basis and gain). But people lost a lot more percentage wise in the 2008 crash. And 'losing' $3,500 is better than losing it all.

    But your math is good enough and should be considered by anyone who is wanting to cash out.

  14. #13

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    The 2008 losses hit nearly every investment and were out of your control. You do have control over the losses from closing or not closing a 401k. Those are self-inflicted and can be avoided.

  15. #14

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    Quote Originally Posted by Zippyjuan View Post
    That could be expensive. Say you had $10,000 in one. Ten percent penalty knocks you down to $9000 and then it counts as ordinary income for you. If you are in a 25% tax bracket, you could lose another $2500 (not sure if the tax applies to amounts before or after the penalty is applied) or $2,025 which would drop your $1000 down to about $6500. They keep 20% as withholdings against the taxes. You just lost $3500. Now if you wanted to put that into a different investment, it would have to go up by 46% just to break even (ignoring costs of the new investment) with what you had in the 401k (to get the $6500 back up to $10,000). That is a big return you need. And that assumes that the 401k didn't grow at all in that time- otherwise you need even more growth to simply break even with keeping the account.

    If you are seriously worried (and I am not), I would not close the account but perhaps put any new money into something else and leave the money you already have in the 401k.
    I'm seriously considering lowering my contribution from 15% to 4%, my employer matches 50% up to 4%.

  16. #15

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    Definalty take that employer match- free money! My employer doesn't offer me a match so I don't use our 401k plan (make my own investments outside of work including an IRA for tax purposes) but I do have (at least for now- who knows what the future may bring) a pension fund which are getting rarer these days.
    Last edited by Zippyjuan; 08-14-2012 at 01:36 PM.

  17. #16

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    Quote Originally Posted by Zippyjuan View Post
    If the dollar is worthless then all things denominated in dollars -all bank acounts, and investments like IRAs and 401ks- will also be worthless so there will be nothing to "seize" anyways.
    I'm wondering what will happen if we have hyperinflation. I sold all my mutuals funds and now own only individual, mostly foreign stocks in my 401K. Suppose I have 100 shares of Toyota in my 401K and the dollar goes to zero. I still own 100 shares of Toyota, correct? Would I be able to sell those shares in another currency?

    That's one of the reasons I sold my mutual funds and bought individual stocks. If there's a crash it seems like it would be easier to handle an individual stock compared to a mutual fund. Especially if the investment company that manages the mutual fund goes bankrupt.

  18. #17

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    I am no stockbroker so I am guessing- but if you purchased the shares in US dollars on a US stock exchange, you would have to sell the shares and then take the money in dollars you get for them and convert that into foreign currency- paying costs for both transactions.

  19. #18

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    Watch the govt. very very closely as changes have been discussed since 2003. They would start with forcing you to invest 3 to 5% in treasuries most likely.

    If and when this happens that will be the very day I close my accounts out, pay the taxes and buy gold.

    You really can't make money with the corruption, manipulation and computer algorhythm trading anyway. Believe me I follow this stuff. Check out ZeroHedge.com some time for starters. Basically you are just protecting capital if you are in cash in your account cause the market will eat you alive these days.

    However, I look at it as making 30% on your money right off the bat as you don't have to pay taxes on that money. Where are you going to make 30% in this market without being an insider at Goldman Sachs or JPM these days ?
    Last edited by Shredmonster; 08-14-2012 at 01:41 PM.

  20. #19

    Default

    Depends on what you mean by safe. If there is any sense of law and order remaining then your money should still be there. Of course, it won't be worth anything. Maybe you could cash it out and buy a sandwich with it.

  21. #20

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    Quote Originally Posted by Zippyjuan View Post
    I am no stockbroker so I am guessing- but if you purchased the shares in US dollars on a US stock exchange, you would have to sell the shares and then take the money in dollars you get for them and convert that into foreign currency- paying costs for both transactions.
    With really high inflation, that's not a problem. When I sell my shares I'll get more more dollars, except they'll be devalued. But my purchasing power should remain about the same.

    The interesting question is what happens with hyperinflation where the dollar actually becomes worthless and is no longer used? My hope is that I'd be able to trade my shares in "Toyota" for whatever currency is acceptable for both parties.

  22. #21

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    If the dollar is no longer used and your stocks are priced in dollars they will be worth nothing. But I don't see that happening.

  23. #22

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    People who held solid German stocks through the Weimar hyperinflation came out all right. When you buy a share of equity in the company it remains a share regardless of what you purchased it with. One share of company A is one share of Company A no matter what happens to the currency. In fact, corporate equity is often not even purchased in dollars, being instead offered as part of a compensation package or as part of a purchase price of a business. But I would want to hold the certificates if I were to stay in equities.

    That having been said, if I had money in equities I would be on the phone right now trying to liquidate them. Penalty be damned. The stock market is a bubble.

    The value of the dollar has had a reprieve due to the collapse of the Euro. But the honeymoon will end. I would turn stocks into dollars and start hunting for agricultural land to buy with the dollars while they retain value.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  24. #23

    Default

    I don't see how this possibly could happen. If they actually tried to move legislation like this, there would be a period of time after it leaves committee that people could act on the information (empty their 401ks) before it's voted on, which would end in the worst stock market crash the world has ever seen. I think most politicians want to avoid being responsible for that.

    Edit: Oops I was responding specifically to the confiscation chatter
    Last edited by brandon; 08-14-2012 at 02:08 PM.
    Waiting for the day the classical liberals drive the hateful alt-right out of the republican party, and the libertarians can rise again.

  25. #24

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    Quote Originally Posted by brandon View Post
    I don't see how this possibly could happen. If they actually tried to move legislation like this, there would be a period of time after it leaves committee that people could act on the information (empty their 401ks) before it's voted on, which would end in the worst stock market crash the world has ever seen. I think most politicians want to avoid being responsible for that.

    Edit: Oops I was responding specifically to the confiscation chatter
    Maybe. But people are spooked by the withdrawal penalties. People will only take that loss if they are convinced that they will suffer WORSE losses if they don't and that takes a level of foresight that is not in abundant supply.

    Besides, it isn't individuals that are holding up the stock market. It is the Fed working through banks. Look at the trade volumes. The thing is almost dead in the water.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  26. #25

    Default

    When it comes to investments...nothing is safe, there are no guarantees.
    - SUPPORT FREE TRADE, SMUGGLE -

    2 + 2 = 5.

  27. #26

    Default

    Quote Originally Posted by Pauls' Revere View Post
    When it comes to investments...nothing is safe, there are no guarantees.
    Some things are safer than others. Cash in a Goldman Sachs account versus gold coins buried in the forest. Big difference in safety.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  28. #27

    Default

    Quote Originally Posted by Acala View Post
    People who held solid German stocks through the Weimar hyperinflation came out all right. When you buy a share of equity in the company it remains a share regardless of what you purchased it with. One share of company A is one share of Company A no matter what happens to the currency.
    That's what I was guessing. It's good to hear someone else say it.


    Quote Originally Posted by Acala View Post
    That having been said, if I had money in equities I would be on the phone right now trying to liquidate them. Penalty be damned. The stock market is a bubble.

    The value of the dollar has had a reprieve due to the collapse of the Euro. But the honeymoon will end. I would turn stocks into dollars and start hunting for agricultural land to buy with the dollars while they retain value.
    Isn't it really the dollar not the the stock market that's the bubble now? My feeling is that stocks will go up as the dollar loses value. Just not as fast as other prices so you will lose purchasing power. But if you're holding cash or bonds or treasuries, you'll get crushed. Personally I'm invested in foreign stocks and physical gold.

  29. #28

    Default

    Quote Originally Posted by Zippyjuan View Post
    One person testifying at a Senate hearing proposed the idea which was immediately shot down (though some like to suggest that it is bigger than that and maybe a done deal- it is not). IRAs and 401ks are not going to be seized. Will their value move up and down and be risky for that reason? Yes- all investments will do that.

    If the dollar is worthless then all things denominated in dollars -all bank acounts, and investments like IRAs and 401ks- will also be worthless so there will be nothing to "seize" anyways.
    I don't think it's a done deal literally, but I think that the fact they invited the author of the plan to testify indicates that they at least consider the plan viable. For all we know, they already have the plan drafted up and are waiting for a crisis to shove it through. Sort of like the Iraq war plans.
    * Enforce Border Security – America should be guarding her own borders and enforcing her own laws instead of policing the world and implementing UN mandates.

    * No Amnesty - The Obama Administration’s endorsement of so-called “Comprehensive Immigration Reform,” granting amnesty to millions of illegal immigrants, will only encourage more law-breaking.

    * Abolish the Welfare State – Taxpayers cannot continue to pay the high costs to sustain this powerful incentive for illegal immigration. As Milton Friedman famously said, you can’t have open borders and a welfare state.

    * End Birthright Citizenship – As long as illegal immigrants know their children born here will be granted U.S. citizenship, we’ll never be able to control our immigration problem.




    Reprinted from http://www.ronpaul2012.com/the-issues/immigration/ [Nov. 29, 2011]

  30. #29

    Default

    Quote Originally Posted by Acala View Post
    Maybe. But people are spooked by the withdrawal penalties. People will only take that loss if they are convinced that they will suffer WORSE losses if they don't and that takes a level of foresight that is not in abundant supply.

    Besides, it isn't individuals that are holding up the stock market. It is the Fed working through banks. Look at the trade volumes. The thing is almost dead in the water.
    Trade volume isn't that low. It is down slightly this year but not much below where it has been for the last ten years- see bar graph below chart at this link: http://finance.yahoo.com/echarts?s=%5Edji+interactive#symbol=^dji;range=my; compare=;indicator=volume;charttype=area;crosshair =on;ohlcvalues=0;logscale=off;source=undefined; (image is flash so I can't copy it for you).
    Last edited by Zippyjuan; 08-14-2012 at 02:37 PM.

  31. #30

    Default

    Quote Originally Posted by The Free Hornet View Post
    I thought the penalty ends up being like 20% or more. Additionally, cashing out means losing future employer contributions (and I thought I would have to quit my job too - not gonna happen). Maybe Acala is correct, they might incrementally push people towards "safe" investments that favor TPTB. But raising taxes would be the easiest way to get 401 money.

    More so, the 401 is tax deferred so cashing out now will increase the war chest. Maybe in 40 years we will have come to our senses or the fake money is all gone as pcosmar suggests.

    For now, I'm happy with my hands, and Uncle Sam's, off that account.
    Cashing out means the withdrawal is taxed as income. The broker will withold 20%, but most of us pay less than 20% on our income. There's also an early withdrawal penalty of 10%.

    You can make penalty free withdrawals for certain things. Buying a house, paying for school, medical expenses.
    * Enforce Border Security – America should be guarding her own borders and enforcing her own laws instead of policing the world and implementing UN mandates.

    * No Amnesty - The Obama Administration’s endorsement of so-called “Comprehensive Immigration Reform,” granting amnesty to millions of illegal immigrants, will only encourage more law-breaking.

    * Abolish the Welfare State – Taxpayers cannot continue to pay the high costs to sustain this powerful incentive for illegal immigration. As Milton Friedman famously said, you can’t have open borders and a welfare state.

    * End Birthright Citizenship – As long as illegal immigrants know their children born here will be granted U.S. citizenship, we’ll never be able to control our immigration problem.




    Reprinted from http://www.ronpaul2012.com/the-issues/immigration/ [Nov. 29, 2011]

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