President Obama recently released his 2014 budget and, of course, everyone focused on the aspect of spending. In fact, it was almost like the magician who diverts your attention to their right hand while the trick is being set-up with their left hand.
Much to the credit of the mainstream media, they found the little item — capping IRAs — on page-18 of the budget, which is a very good source of revenue with an estimated $9 billion over the next decade.
Yet, unfortunately, the media has once again missed the important point. It’s not just IRAs, but also 401Ks, Roth IRAs, and perhaps even deferred compensation, municipal bonds, insurance policies, and annuities that will all be affected as evidenced by this excerpt from Obama’s budget: “Limit an individual’s total balance across tax-preferred accounts.” This statement is so broad that it fully opens the door for governmental interpretation.
The mass media also focused on the fact that the cap was $3 million. Yet, once again, this is not exactly the case. The actual budget declares to “limit an individual’s total balance.....to an amount sufficient to finance an annuity of not more than $205,000 per year.” Given the current artificially low interest rates, the number needed in order to achieve such a cash flow is $3 million.
However, if interest rates rise, as most of the world assumes will happen eventually, then the $3 million instantly becomes a lot less. And if hyperinflation hits, that $3 million could hypothetically be reduced to a mere pittance. (It’s all relative.)
The final unanswered question (and even unasked question) is as follows: If it is determined (sounds like a new official government department is needed — Obama job creation) that your lifetime savings of IRAs, 401Ks, Roth IRAs, municipal bonds, and even annuities, are all collectively over the government’s maximum amount, what happens? Are you required to liquidate and pay taxes? Or, does the government simply say, “Sorry, yours is mine, we need it, have a nice day.”
Didn’t the government say the exact same thing on April 5, 1933, the day FDR seized Americans’ gold? At that time, at least the gold holder received something in return, approximately $20 per ounce.
Yet, only a few weeks later, those same previous gold owners watched as gold was revalued at $35 per ounce — an approximate 50% haircut. Of course, the mass media accepts all of this, from 1933 to the present-day, as simply the government’s comprehensive understanding of the exact needs of the individual citizen. It starts with taxes and ends with seizure. But, of course, according to the mainstream media, it can’t happen here because we’re not that island country known as Cyprus — not yet, anyway.