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US Departments of Labor and Treasury Schedule Hearing on Confiscation of Private Retirement Accounts

On August 26, the US Department of Labor issued a news release (  It lists the agenda for the joint hearings being held with the Department of Treasury September 14-15, 2010 on what is euphemistically called “lifetime income options for retirement plans.”  The hearings are being conducted by the Labor Department’s Employee Benefits Security Administration.

I don’t like speaking in tabloid-style terms, but the unstated agenda of these hearings, as I understand it, is to push for the US government to eventually nationalize (confiscate) all assets in private Individual Retirement Accounts (IRAs) and 401K plans!

The US government is desperate to get its hands on private assets to help cover soaring budget deficits and debts, and this is simply the largest and easiest piggy bank that could be seized.  The Investment Company Institute estimates that at the end of 2008 that there were $3.613 trillion of assets in IRAs and $2.350 trillion of assets in 401K plans.

For more than the past ten years, I have warned readers that the US government was eventually going to go after private retirement accounts.  I considered that as the most important reason to avoid establishing precious metals IRAs.  Very few other writers (Ron Holland being one) have picked up on this issue as early as I did.  In fact, the mainstream media pretty much ignored the subject even after a House Committee held hearings on the issue in October 2008.

Obviously, an outright seizure of assets would meet stiff resistance from the public.  So the confiscation will never be described as such by government officials.  Expect to see terms such as “retirement income protection” thrown around.  It is highly likely that such a program would be implemented in steps to help overcome public opposition.

The US government plan is to eventually take ownership of all assets in IRAs and 401K accounts and replace them with US government “Treasury Retirement Bonds.”  In the October 2008 hearings, it was proposed that these bonds pay a 3% interest rate.  Another major change is that, upon retirement, the individual’s retirement account would be converted into an annuity.  Once the individual is deceased, the individual’s heirs would not inherit anything (similar to what happens now with Social Security “accounts”).

Among the steps that could be taken to accomplish total confiscation are to first make the conversion voluntary, then make it mandatory for only a portion of total assets.  The final step would be making it 100% mandatory for 100% of all assets.  One idea proposed in the October 2008 House Committee hearings (after trillions of dollars had already been lost in most assets categories) to help push this plan onto the public, was to allow the seized assets to be replaced with government bonds at a face value of a previous higher valuation date.  The idea was that a private citizen, who might have lost 20-50% of his retirement asset value, would be much more willing to accept an inferior retirement asset if doing so allowed them to recoup the losses.

Obviously, brokerage companies and mutual funds strongly object to the potential loss of fees they are now receiving for private retirement plan services.  The Investment Company Institute, whose member companies manage more than $11 trillion of assets for about 90 million investors, reports that 96% of surveyed households object to the US government requiring that retirement assets only be distributed as annuities.  Among the scheduled speakers at the upcoming hearings are representatives from the Investment Company Institute, Fidelity Investments, Putnam Investments, Lincoln Financial, and Vanguard.

These mid-September hearings have to be evaluated in conjunction with the introduction on August 5 of S. 3760, sponsored by Senators Jeff Bingaman (D-NM) and John Kerry (D-MA) to established mandatory automatic IRAs for many workers who are not covered by company retirement programs.  If enacted, employers of such workers would be required to pay 3% of compensation into these accounts, which would have the effect of increasing the assets that the US government could then seize.

As recently as my July 27 CoinUpdate column, I have continued to warn readers to avoid establishing precious metals IRAs—specifically because of this risk of confiscation.  I have also long advised that the companies pushing such accounts to customers were giving their customers bad advice.

But, if you already have a precious metals IRA, what can you do now to continue to hold gold and silver as insurance against the decline in the value of other assets?  I’m sorry, but I don’t have any perfect solutions.

Any legislation is likely to take time before it becomes law.  Therefore, while individuals need to begin to plan how to protect themselves, there is no need for immediate knee-jerk reactions.

Among the options to consider are distributing assets from the retirement accounts and paying the respective income taxes on them.  In this way, you can maintain custody of most or all of the assets (depending on where you come up with the funds to pay the taxes).  However, if you are under the age of 59-1/2, you may be subject to an extra 10% excise tax for taking a premature distribution.  As ugly as this option is, which could accelerate tax payments, it is perhaps the best protection against having assets turned into US Treasury debt.

Another possibility is to sell off your precious metals in a retirement account and replace this holding with gold and silver outside of any retirement account.  This would preserve your precious metals position, though it would leave other assets at risk of confiscation.

For some, it may make sense to see what kind of incentive (bribe) is offered for those who voluntarily convert their assets into US Treasury debt.  Because gold and silver prices have been rising for the past decade, though, there may not be any such benefit available.

If I hear of other good ideas for protecting wealth from what I expect will ultimately be outright confiscation of IRAs and 401K assets, I will pass them along.  In the meantime, give serious consideration as to whether it is worth making future contributions to private retirement accounts.

Keep in mind, contemplating confiscation of private retirement assets is a sign of extreme desperation by the US government.  By implication, it is a loud warning that the future value of the US dollar is almost certain to be much lower than it is today.  Owning gold and silver, outside of private retirement accounts, is now a much more important wealth-protection step than ever before.


1 Comments in Response to

Comment by Ross Wolf
Entered on:

Let U.S. Government steal your Retirement, Government Will Take Everything Else From You.

While government plans to confiscate Citizens’ retirement plans to pay for relentless government spending, Congress approved $26 Billion more to pay State and Local Employees—“to save their jobs” not yours!

Some in Congress appear intended to confiscate Americans’ retirement to pay for the comfort and high pensions of government employees. In contrast millions of Americans face the prospect of unemployment, homelessness and soup-lines. 53% of Federal, State and Local Employees are unionized. Many paid twice that of Americans working similar positions in the private sector. In part due to union influence, the federal government is moving the direction that collapsed the USSR—huge unaffordable bureaucracies; imploding numbers of government employees. Despite the horrific recession Federal and State employees continue to receive unsustainable salaries, benefits; and large pensions that will bleed taxpayers for decades. Some Unions appear intended to dump on U.S. Taxpayers their obligation to pay its members inflated promised benefits. Meanwhile unions think nothing of spending millions on political campaigns. Perhaps taxpayers should demand independent audits of certain unions. Both unionized and not-union Government employee salaries and benefits need to be sharply trimmed, brought in line with private sector workers. Federal and State Legislation should be introducing legislation to cut back or terminate unaffordable pension and salary packages that hold hostage taxpayers, especially with deficit spending out of control.

It is clear Obama will have to strip U.S. Citizens of their assets and their children’s inheritance, confiscate Americans’ retirement plans, tax anything and anybody to pay interests on government borrowing; pay for government’s failed welfare programs. Obama like most socialists has no understanding of economics. The Obama government’s only solution to the economic/unemployment crisis is spend more; borrow more; tax more and print money. Obama has made Americans afraid to invest, reluctant to spend money on goods and services, every month causing more Americans to lose jobs. Obama taxes will increasingly confiscate Citizens’ discretionary income before it can be spent on goods and services, causing greater and greater unemployment—but not government jobs—further shrinking the real economy. A turn around in the economy can’t happen with Obama in the White House and leftists polluting local, state and federal government. The Obama government like foreign socialists governments is unfriendly to business, does not care their polices are drowning businesses with taxes, regulations and controls that will inhibit economic growth and employment for years.

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