Obama’s MyRa Scam is the first wave of an attack on your retirement accounts. The MyRa Scam is basically a mini Roth retirement account that allows you to withdraw your contributions in an emergency and forces you to invest in U.S. Treasuries.
What’s the purpose of the MyRa Scam? To get young people used to the idea of putting their savings in a government controlled retirement account invested in the safest, cash equivalent investment ever – the U.S. Treasury board.
These U.S. banks back the MyRa Scam and lay the groundwork for a government takeover of the retirement system. As a generation grows up with (essentially) a government pension, free market investing and taking on “risk” in your retirement account will be a thing of the past. Retirement accounts will become the engines of the economy, the saviors of the national debt, and the tools of even more wealth redistribution.
The MyRa Scam is basically a Roth IRA with training wheels that has the added benefit of saving you from yourself and your desire to manage your investment decisions. The MyRa Scam eliminates “risk” by forcing you into U.S. treasuries.
While the MyRa Scam “saves you from bad investments,” the old school Roth IRA has a number of advantages for younger and older savers alike. I can’t see any reason to fall for this MyRa Scam.
As you probably know, money you contribute to a traditional IRA is not taxed now, but when you take it out, you pay big . . . ordinary income tax rates rather than capital gains rates. Roth IRAs are the reverse – you don’t t=get a tax deduction for the contribution now, but withdrawals after age 59 ½ are tax free.
For the younger investor, your income and tax bracket at age 59 ½ should be higher than it is now. A Roth protects you from increasing tax rates and the tax penalties on higher income earners, but requires you to pay today for a tax deduction tomorrow.
The second selling point for the MyRa Scam and Roth IRAs in general, is flexibility. Both allow you to take out cash to start a business, pay the rent while you go back to school, or in an emergency (Obama’s big selling point for his MyRa). Try this in a traditional account and you may get to pay a 10% early withdrawal penalty plus taxes on the distribution. While there are ways around the 10% penalty, they are tough to qualify for. FYI . . . about 5.7 million Americans got hit with a 10% early withdrawal penalty in 2011.
¨ You can withdraw your original contributions from a Roth without jumping through hoops. Taking out appreciation is another matter.
In my opinion, the most important difference between an old school Roth and the gimmicky MyRa Scam is that you can control your investments in a Roth. While MyRa is the quickest way to help pay down the national debt, if that’s not your priority, you need a pre-Obama Roth IRA or other vehicle.
In fact, once you leave your current employer, you can take complete control over your Roth or traditional retirement account. You can choose to leave it with a U.S. brokerage firm, move it to a self directed custodian who will take your suggestions on how to invest the money (at least for most domestic transactions)., or you can put your account(s) into an offshore IRA LLC.
If you’ve been with one employer for many years, you may be eligible to take over management of a portion of your retirement which has vested. If you decide to take your retirement account offshore, in an IRA LLC, you can invest it in just about anything you like. You can hold gold, foreign real estate, multiple currency accounts, international stocks, invest with leverage not available in the U.S. using a VBIT Blocker, and a whole host of alternatives to the MyRa Scam and U.S. treasuries.
Taking your retirement account offshore can open a whole new world of high yield investing. For more detailed articles on this topic, please check out my website at www.PremierOffhsore.com.
As many of my comments above and the MyRa Scam are focused on younger investors, I would like to note that a 401(K) rather than a Roth IRA may be your first best savings tool. If your employer offers a 401(K), and will match your contribution, then always start saving with a 401(K).
In most cases, an employer who offers a 401(K) will kick in .50 cents for every $1.00 you save, up to around 6% of your salary per year. The best of both worlds is to contribute enough to a 401(k) to get the full match and then fund a Roth IRA.
For 2014, you can contribute up to $5,500 to a Roth IRA if your AGI is less than $114,000 single and $181,000 joint. For higher earners, you might invest $5,500 in a non-deductible IRA and convert that to a Roth.
If you are planning to take your retirement accounts offshore as soon as they are eligible, you might consider a Roth 401(k) sub account. A number of 401(k) plans allow for this and is a valuable tool if you expect your income and tax bracket to rise or you will focus of higher returning international investments when you leave your job.
If you want to avoid the MyRa Scam, stay focused on traditional and Roth IRAs. If you would like more information on how to move retirement accounts from a previous employer into an offshore IRA LLC and out of the reach of Uncle Sam, please send me an email to infor@premireoffshore.com. All consultations are free and confidential.