These Government Agencies Want You In 401(K)'s. And Here's Why.

[The following post is by Paul Seymour, Director of TDV Offshore]

I woke up this morning here in the communist-leaning Little Italy which is Buenos Aires, and was hoping to find something to write about, and what did I see? An article entitled – Treasury and IRS Encourage Use of Annuities in 401(k) Plans.

That’s the kind of title that just sets me to bein’ a tad skeptical. Excuse me for being a bit jaded, but these are the guys who over the past few years, have blatantly committed illegal acts, and have no qualms about lying to your elected representatives in order to try and evade prosecution, or much more likely, the proverbial slap on the wrist.

Whenever I see that Treasury is “encouraging” something, the hair on the back of my neck stands up. My first reaction is to question why unelected bureaucrats with a criminal past are interested in what citizens do with their own retirement savings to begin with. Of course we both know the answer to that, and I’m just feigning the naiveté for the sake of argument.

As I read the article it started to become clear that Treasury, with all of its obvious good intentions in mind to protect the life, liberty, and pursuit of happiness of the citizens they serve, are taking an ever-increasing stance that they are responsible to “protect” the citizenry from the possibility of making poor investment decisions. 

Statements like this, by J. Mark Iwry, senior advisor to the Secretary of the Treasury and Deputy Assistant Secretary for Retirement and Health Policy, support my observation— “Treasury is working to expand the availability of retirement income options for working families. By encouraging the use of income annuities, today’s guidance can help retirees protect themselves from outliving their savings.” That all sounds very altruistic, but please reference the previous comments regarding the credibility of these clowns.

Notice he uses that sketchy phrase “protect themselves” while referring to a means whereby employers will make the investment decisions on behalf of their employees. In many cases, that decision will then be passed on to the custodial investment manager handling the investments. There’s a case of the fox watching the henhouse for you.

These new guidelines are geared towards, as he says “working families” who have an employer-sponsored plan. The article states – “These qualified defined contribution plans will now have the option of diverting contributions on behalf of employees into target date funds (TDF’s) which get their name from the fact that their allocation of investments shift gradually from equities to fixed income as participants approach an intended target retirement year.”

Nothing like formulating investment vehicles for “working families” which they could never possibly understand. Those equities, then, will again be selected by the custodial investment management firm, as will the annuity contracts, and their underlying assets. All, no doubt, with the best interests of the employees in mind.

The article notes that “Many employer-sponsored 401(k) plans offer so-called target date funds as a default investment for participants who do not affirmatively elect a different investment.” Clearly, all of you who are reading this little piece don’t fall into the category of the multitudes who check off the “please make these decisions for me” box on their retirement fund account management forms.

The danger, though, is that the US government (USG), acting unconstitutionally through its unelected and unaccountable revenue gathering arm, will work together with the banksters, who they’ve essentially employed in the 2008 bailout, in order to effectively take control of all retirement funds. Do I sound like I’m sitting in the corner drooling under my tin foil hat? Time will tell. 

WILL YOUR FUNDS BE STOLEN?

I can easily foresee that these default investments will one day be converted to US government bonds as the underlying investment vehicle as large corporations, in addition to the banks, start working in concert with the USG in the name of “national security”, or some such other contrived excuse. We already have Amazon working for the CIA, and Google for the NSA, PayPal apparently for the OECD (Treasury’s offshore bank police) etc. It’s not that much of a reach here.

The article goes on to state – “The letter also describes how ERISA fiduciary standards can be satisfied when a plan sponsor appoints an investment manager that selects the annuity contracts and annuity provider to pay the lifetime income.” This is the juncture at which the government gains control over the investments of those who don’t trust themselves to manage their own retirement funds.

Again, as a skeptic regarding the altruism of government agents, I foresee a continual creep in this regard. I worry about the day when Treasury decides that their pilot plan to protect the retirement income of the citizenry has been so successful that they’ve decided to extend that protection to all tax-deferred retirement accounts. For your own protection of course.

As if to give that statement some credence, I hit on another article also released today. Judge Dismisses Lawsuits against IRS by Conservative Groups Just in case you thought that any branch of the government is still working for the people, that should allay any such fears. It’s now official, the Legislative, Executive, and Judicial branches are now all acting in concert in order to shred the Constitution and take away any rights you thought you might have been born with.

DISGRACEFUL INJUSTICE

I think the title pretty much says it all about what happened. The judge said-“Unless an actual, ongoing controversy exists in this case, this Court is without power to decide it”. Under that logic, if someone, like a cop for example, killed your daughter at the mall with a bean bag gun, this sad excuse for a judge would rule that as long as she’s not still killing others, there’s nothing he can do about it under the law. She gave her solemn word never to draw another bean-bag gun going forward, so let’s just let bygones be bygones. Get over it. Yeah. That’s US style justice for you.

The article then quoted one of the plaintiffs who quite correctly summed it all up – “This ruling is offensive to every citizen who believes in equal treatment under the law,” said FreedomWorks executive vice president Adam Brandon in a statement. “It doesn’t matter when the IRS bullied conservative groups or if they stopped, the point is that it was done, and the IRS has to be held accountable. Today’s decision was the legalization of federal bullying and unchecked discretionary authority, so long as agencies can play the waiting game long enough to correct their misdeeds. The fact that it occurred in the first place was appalling, but the fact that it was excused by the courts was disgraceful.”

Therefore don’t expect any common sense help from the courts either. Quite obviously the jack-wingtips at IRS and Treasury are going to do whatever they want to, and will never be held accountable. Your method as to how to react to that can be justified at almost any level in the face of such blatant tyranny. An offshore trust, for example, would be an excellent defensive response. We can also do a tax free rollover of your IRA or 401(k) and legally move the assets offshore and under the blanket protection of a due-process respecting jurisdiction. You will then be able to easily invest in assets outside the US Dollar, and in virtually any asset class. Precious metals or foreign real estate for example.

That’s it for today’s current events.

Hasta la próxima amigos, and here’s to living right.

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Paul worked for several years with Big 4 CPA firms in both the US and Saudi Arabia, and then spent many years as a multi-national corporate Controller and CFO in places like Florida, Riyadh, Abu Dhabi, Cairo, and Medellín. In his second, more free life, he has found a natural home in the offshore industry following almost 2 decades as a permanent expat from the former America. Contact him to learn more about the realities of economical offshore asset protection [email protected]