[The following is by Paul Seymour, Managing Director of TDV Offshore]
Congress and its army of unelected thieves in Washington are drooling over the low hanging fruit which are the trillions in your qualified retirement accounts. And sooner or later they’re going to move. They’ve made attempts already.
In fact, people like Ron Paul, who spent decades as leader of several Congressional Finance committees are on public record as stating that the conversion of your retirement funds to worthless government bonds is imminent. Other Congressmen are fully aware of these plans, they just lack the veracity of former Congressman Paul.
There may not be a long, drawn-out debate involved either. Maybe all it will take is a significant terrorist attack on US soil. You’ll go to sleep one night thinking you had a retirement account invested in mutual funds, and wake up to learn that it has been converted to US Government treasuries for “security” purposes.
Mutual funds are sketchy enough. But getting your IRA involuntarily transferred out of mutual funds and into Treasuries is not much of an improvement. Most countries in the world are running away from the dollar as fast as they can.
Get Your Funds Out of Dodge
Ideally, you want to make IRA changes that provide you with more control onshore or off. And given what’s probably going to happen sooner or later, getting your funds entirely out of the US is probably a good idea.
Let’s examine these issues one at a time, starting with fund structure.
There are a few different types of plans out there. Traditional IRA’s, Roth IRA’s and 401(k) plans comprising the vast majority. Many of the 401(k) plans which were set up by employers, look like sweetheart deals with the investment houses, wherein you may invest a portion of your salaries, pre-tax, as long as you invest in a sad looking basket of investment options offered by the Third Party Administrator (TPA).
Under the law which enabled such tax deferred investments back in the 1970’s, ERISA, the company is required to 1) have a designated plan administrator on staff, and 2) Provide you with a Summary Plan Document. Your HR department is probably the place to start to inquire as to whether or not you actually control your own retirement account.
You should dedicate an hour or two to review your Plan Document in order to find out whether or not your retirement account is under your control, or that of your employer, and their hand-picked TPA.
If you are forced by the Plan Document to be invested in the US stock and bond markets, you ought to think strongly about liquidating your tax-deferred plan, paying the taxes and penalties, and then moving the remaining proceeds offshore, and out of the US banking system, and the USD.
Not only will you save the current hit of taxes, at your current high tax rates, in addition to a hefty penalty, but you will be able to protect your assets in jurisdictions which still respect due process of law. Once offshore, under a properly established LLC, and in a private, well managed offshore bank, you will be able to invest in virtually anything and without fear of an executive ordered confiscation.
You could also immediately diversify your fiat currencies so as to hedge the serious downside threats of the USD. Maybe some well managed Swiss Francs or Singapore Dollars, for example. Or set up a brokerage account offering 25+ international exchanges, if you have the guts and wherewithal to invest in any stock markets in these turbulent times. Precious metals purchasing and storage in Liechtenstein is available as well.
Steps to Implement the Protection Plan
Here are steps you need to take to secure your IRA funds offshore.
1) Tax free rollover to a new US based custodian who is registered with the IRS to report offshore SD IRA’s
2) Establishment of an offshore LLC, as an asset of the IRA, to hold the investment assets
3) A private bank account set up under the LLC to receive your liquid funds from the custodian.
4) Transfer funds from the custodian to the offshore bank
As manager of the LLC, and sole signatory on the bank account, you are now in complete control of your assets. No more ticking of boxes to elect a lesser of evils to invest in.
You can do all this on your own, but if you need assistance, we’re here to help.
Your tax reporting is not significantly changed. If you require assistance we also offer compliance services.
Email me at [email protected] to set up a call.