Sunday , 21 July 2024

Your IRA Is At Risk – Here’s Why & What To Do About It

The myRA program, which ostensibly helps people save for retirement (though it offers no benefits over existingIRAs options). is the opening shot in the undeclared war on your retirement savings and an eyebrow-raising ruling in the US Tax Court is the second shot. Let me explain.

The above are edited excerpts from an article* by Nick Giambruno, Senior Editor of entitled The Next Shot Has Been Fired at Your IRA.

The following article is presented by Lorimer Wilson, editor of (Your Key to Making Money!) (A site for sore eyes and inquisitive minds) and the FREE Market Intelligence Report newsletter (register here; sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.

Giambruno goes on to say in further edited excerpts:

I’m From the Government and I’m Here to Help

It’s no secret that governments strapped for cash commonly turn to plundering retirement savings. They are a juicy, irresistible, low-hanging fruit and, the truth is, it could happen in any country drowning in debt and financial troubles—the U.S. included. It’s usually accomplished by forcibly converting retirement assets into government bonds under the guise of helping people manage their risk.

New Risks for IRA Owners

The recent decision in the case of Bobrow v. Commissioner places new limits on a maneuver known as an IRA rollover [which]  is used to move your retirement funds to a new account without taxes or penalties if certain conditions are met…[should] you want to escape the investment straitjacket of a standard retirement account with a big custodian like Prudential, Schwab, Fidelity, or T. Rowe Price. Usually these accounts offer a very limited menu of investment options.

Benefits of An Offshore IRA

An offshore IRA, on the other hand, can unshackle your retirement savings.

  • It can invest in almost anything – anywhere in the world – such as, for example:
    • a rental apartment in New Zealand,
    • a private company in Panama,
    • an offshore bank account in Hong Kong,
    • or physical gold stored in Singapore,
    • etc.
  • It can protect your IRA from…the U.S. government were it ever to do what many other bankrupt governments have done, and forcibly convert retirement assets to government bonds. All they would have to do is simply issue notices to them and Poof!—your account would be frozen, and the holdings would be converted in some proportion to “safer” Treasury securities. For your own good, of course…

How will the government convert your retirement savings if it’s in the form of physical gold held in Singapore, or foreign real estate, or an offshore bank account, or any type of offshore asset? The answer is: not very easily, and they probably won’t bother. They’ll likely be focused on the sitting ducks—including the IRAs with the large custodians. In all likelihood, if you have offshored your IRA, you’ll be grandfathered in and exempt from the new requirements…

Action Required

In order for you to move your IRA offshore, however, you’ll likely have to do a rollover to move your funds from your existing custodian (likely one of the large firms) to one that allows you to take your funds abroad (likely a smaller firm) and that’s where the recent court ruling comes in.

In Bobrow v. Commissioner, the court ruled that taxpayers can only do one rollover per 12-month period.

  • Prior to the ruling, the IRS had long allowed—and officially sanctioned in Publication 590—doing one rollover per IRA in every 12-month period. For example, this meant that if someone had two separate IRAs, they could perform two rollovers each 12-month period.
  • The new ruling, however, throws this completely out the window despite the fact that it had appeared in IRS guidance. Now you can only have one rollover in a 12-month period, regardless of how many retirement accounts you have.

It’s Not the End, It’s the Beginning

There are 3 disturbing aspects to this ruling:

  1. People considering multiple rollovers have to be extremely careful. There’s no margin for error, so be sure you consult with a tax professional. If you don’t do it correctly and your rollover is disallowed by the IRS, you will likely be subjected to an enormous bill of taxes and penalties.
  2. IRS guidance isn’t worth much. The judge in the case said as much when he declared, “Taxpayers rely on IRS guidance at their own peril.” While this is remarkable, nobody should really be that surprised that the government can and will make up the rules as it goes along.
  3. Most importantly, this ruling is another incremental step to the eventual end game—the conversion of retirement assets to Treasuries.

This ruling hinders the ability of some people to move their IRAs away from the big custodians, which is a necessary step in taking them offshore. Before any potential conversion to Treasuries, you can be sure that the government will have sealed off all the exits from the big custodians to optimize their harvest. This is a step in that direction. Don’t think this is the end – this is just the beginning. I fully expect incrementally more severe restrictions on IRAs in the future.

With the Bobrow v. Commissioner ruling and the myRA program, the government clearly has its attention set on retirement savings and on slowly chipping away your options, as—not coincidentally—it slides further into debt and bankruptcy.


Given the:

  • recent history of governments around the world pilfering the retirement savings of their citizens,
  • the jaw-dropping dismal financial condition of the U.S. government, and
  • the creeping measures directed at retirement assets,

it’s absolutely critical for you to offshore your IRA before it’s too late. But it’s not just a defensive measure. Offshoring your IRA will unlock a whole world of new international investment opportunities that would otherwise be unavailable.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

* (Copyright © 2014 Casey Research, LLC.; For more on exactly how you can offshore your IRA, I’d suggest you check out our Going Global publication, where we discuss this important diversification strategy in actionable detail.)

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