Should I cash in my IRA's and close my bank's acct. before Y2K?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
We are very concerned about not being able to access our IRA's and bank balances, also about automatic withdrawls and automatic payroll deposits. My husband works for the SBA (fereral). He is 62 and I am 59. We need to be able to access our money if it is needed. We have purchased your Time Bomb 2000 and appreciate your advice.
-- Elizabeth Augsburger (MARANTHA@worldnet.att.net), June 20, 1998
Yes. If wrong, you loose a few $ in interest. If right you have not lost it all. 1)Cash out 2)Buy a bible 3)Read it
-- Ramsay Devereux (Ramsay@instanet.com), June 21, 1998.
Depending on your age, cashing in an IRA, taking distribution of a pension plan etc. could have serious financial consequences. Jump the gun and no major collapse and you could lose half in penalties and taxes. Do nothing and it may vaporize.
I have found a variety of options for IRA's and pensions that put you in much greater controlof the type of investment,including gold to a pension plan where I have the checkbook and could remove the monies in a flash. not the weeks it takes for the conventional plans. It's all legal just not well known.
I'm thinking on putting this together into a report. If this would be of interest please e-mail me
-- Sam Smith (email@example.com), June 21, 1998.
I wish I could remember the site i saw this on, but if I recall I'll post the link. Essentially, some federal agencies have advised their employees to pay rent, etc. for a few months into the new year -just in case. They also are advising taking out one months salary in cash to have on hand- just in case. Well, if 50% of Americans decided to pull out ONE months salary, the system collapses. The cash in circulation is a minuscule fraction of to the amount in the banks as electronic deposits, and most of that is held privately by consumer oriented businesses- Wal-Mart, McDonald's, etc. Not every one can pull out the money because it does not exist in tangible form, and the feds can't print it fast enough.
-- Richard Dale Fitzgerald 2 (Daledoe@bnoc.net), June 22, 1998.
Believe me, there won't be any bank runs since you can't get people to believe a problem they can't see. Did one NASA engineer complaining that the O-ring wouldn't work in freezing weather change anybody's plans? Neither will we.
-- Amy Leone (firstname.lastname@example.org), June 23, 1998.
Amy, In a way, I hope you are right. A "run" on banks for cash would no doubt (have to) result in intervention by government. Such crises provide Uncle with the opportunity to make changes "for the good of the people." While there is some truth in that, many of us older folk now realize the "changes" during FDR's administration (to supposedly "help" people during the Great Depression) brought about the welfare state we have for the young, and for the elderly. Those in the middle have paid, and paid, and paid,..and still are! The incentive for private saving was destroyed, and people who had never paid into Social Security were put on the dole immediately. There were no nursing homes when I was growing up (Chicago); people took care of their elderly, (doctors came to them in their homes) until they died. It all changed, starting with FDR; let's hope and pray Y2K doesn't pull us totally into Socialism!
-- Holly Allen (Holly3325@juno.com), June 23, 1998.
Cashing in IRA's. Lose half in penalties and fees and nothing happens. Let it ride and watch it vaporize. Either way it's a lose lose situation. One key element you need to remember is what will any dollars you leave anywhere be worth. A currency devaluation is not so far fetched. Have a sufficient amount in gold and silver and hope your remaining cash stash will not be entirely devalued or completely defunct. E-mail for further discussion.
-- Marc Trimble (email@example.com), June 24, 1998.
I very much disagree with Amy's analogy of the shuttle O-rings and a run on banks.
The decision on the O-rings was unique, one-of-a-kind. It was made under enormous pressure to perform, stay on schedule, keep costs down, not admit failure, fear of embarassment, etc. Pulling money from your bank is a completely different matter.
It's an easy, painless procedure to pull your money out of the bank now. But, the minute the aroma of Y2K nervousness wafts out into the public nostrils the run will begin. Once it does, the herd instinct will kick in. Then the panic will start. It will be the same with the stock market.
Two rules in life: Don't mess with a man's wife or his money. Both will get you an instant reaction. Think about it...if you saw a run on banks, wouldn't your instincts tell you to get yours before someone else does? It may be selfish, but I think we all know we're talking survival here. Don't underestimate the power of the instinct to survive.
-- Pastor Chris (firstname.lastname@example.org), June 24, 1998.
I totally agree with Marc. Both cashing out a retirement account early or leaving it alone will result in watching it dwindle. Cash on hand may not be worth much or at least less than it does now no matter what the govt does. We need to look at other options.
If you can loan yoursef money from your retirement account, I suggest you do so and "invest" in something that historically does not lose much value such as gold. Or put it under your mattress. You may lose some $ in interest, but better safe than sorry. Besides, maybe you could use the cash to buy some stocks when they're at their all time low and make out like a bandit!
Seriously, I would take a look at the options you have with your investments before 1999. You might be able to roll over your retirement savings to an account that affords you more flexibility than your current one.
Remove the "x" from my e-mail address if replying directly to me.
-- CRogers (xcr28379@GlaxoWellcome.com), June 24, 1998.
I've already cashed out my IRAs. The penalty was 10%.
An IRA is, by its nature, a tax-related account. Because it's tax-related, the US grubbymint *may* feel that it has an _entitlement_ to some or all of your money, in the name of a "National Emergency."
I removed ours as a "precautionary measure."
-- Gary Carlson (email@example.com), June 25, 1998.
To cut the tax on the IRA (or other plan withdrawal) and remain a law-abiding US citizen using very established, legal tax avoidance techniques, take the money out of the plan and contribute the cash to a limited partnership you set up, controlled by a corporate general partner owned by you and controlled through a shareholders' agreement. Gift 98% of the lp interest to a qualified donor-advised fund public charity.
Benefits: Your deduction is huge if the partnership is structured properly- use it this year and next against 50% of your AGI- who knows thereafter, you control the assets, can have them in land, gold, or whatever you want for the partnership, you pass control (through the corp.) on to your spouse, kids and grandkids, terms for cashing lp partners (the charity) out later can be negotiated when the time comes- even 70 years from now. . This work is technical, detailed and expensive to do. It must be done right- not unlike the programming... but you save 50% to 75% of the tax you otherwise would pay on a decent-sized retirement plan. You'll still pay any applicable 10% early withdrawal penalty (unless you're retiring anyway). And it happens to be the kind of law I practice :) -- at least until January 1, 2000. Looks like creditor protection- the other side of this, may also get to be alot more important if the legal system holds together. Because of the range of possible scenarios that may occur, do plan to pay what little taxes you would legally owe with good planning.
P.S. Highly appreciated assets, including public and closely-owned stock, can be sold with 98% of the gain attributed to your charity- tax free but remaining in your partnership for your capable management through the y2k problem.
-- jim smyth (firstname.lastname@example.org), June 26, 1998.