Author Topic: Dangers of tax advantaged accounts?  (Read 12179 times)

Loud Noises

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Dangers of tax advantaged accounts?
« on: October 16, 2013, 02:23:55 PM »
Hi all, this is my second post here.  I came across a thread that touched on this topic but it seemed to go south and was locked.  Recognizing that it may be a touchy issue, I'm still curious about the thoughts of the community on the topic.

Until recently, I have not saved in any tax deferred or tax free retirement accounts.  Now, with improved means and lowered expenses, I'm looking at contributing to a Roth IRA.  However, I am concerned about the long term risks of locking money away based on current laws and trusting the government will "play nice" over the coming decades.  With bail-ins, pension nationalization, savings haircuts, etc becoming more popular around the world, do Mustachians worry about this, and if so, how do they hedge against this risk?

As I look at history, there is much more precedent to screw over savers than there is to honor commitments made to them.  This is the core of my concern.  And this is why putting money right on the table in front of the government in exchange for a promise of preferential treatment over the next 30 years scares me a bit. What are your thoughts?

bo_knows

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Re: Dangers of tax advantaged accounts?
« Reply #1 on: October 16, 2013, 02:31:47 PM »
I hedge my risk by contributing to many different types of accounts.

- 401k - Tax-free going in, taxable coming out. Worst case: I'm not sure... raising the age to take the money out? I can't see the government charging more taxes on the way out.

- Roth IRA - Taxed money going in, tax-free coming out - Worst case (IMO): Increasing the age of withdrawal and/or a small capital gains tax.  There would be absolutely no reason to put money into this account if the government decides that it's no longer tax-advantaged... so I'm not sure what they'd do to hurt this account. 

- Taxable Accounts - Taxed money going in, capital gains taxes coming out - Worst Case: Increased capital gains taxes.

Spread your investments out over many options, including perhaps real estate, and hope for the best.  I don't spend time worrying about it.

matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #2 on: October 16, 2013, 05:28:52 PM »
I don't mean to minimize your opinion on this manner, but if someone is coming from a place of pure conjecture and trying to determine what to do with their money for the next 30 years I'm just going to go back to what we do know now and what is not conjecture.

If we're going to start tossing out all the possible future scenarios which may affect your 30 year time frame then go ahead and build your bomb shelter now and stock it with guns, bullets, and seeds.

What examples did you come up with during your looking at history? What precedents have been set?

Frankies Girl

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Re: Dangers of tax advantaged accounts?
« Reply #3 on: October 16, 2013, 06:38:48 PM »
As I look at history, there is much more precedent to screw over savers than there is to honor commitments made to them.  This is the core of my concern.  And this is why putting money right on the table in front of the government in exchange for a promise of preferential treatment over the next 30 years scares me a bit. What are your thoughts?

First thought was "Is this really a thing?" But then I guess it is if you tend to be distrustful in general.

I honestly don't think that using tax advantaged accounts is dangerous in the least. If you don't feel comfortable investing in tax advantaged accounts, then don't, but you're letting paranoia rob you of a really sweet deal.

Cyrano

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Re: Dangers of tax advantaged accounts?
« Reply #4 on: October 16, 2013, 06:57:50 PM »
If a future government is going to confiscate savings, they can confiscate it from the taxable account as easily as from the tax-advantaged one.

If a future government implements a large consumption tax, no asset location strategy pursued today will avoid taxation of your consumption 20 years from now.

You really can't look for a loophole in a tax policy that hasn't been written yet.

Loud Noises

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Re: Dangers of tax advantaged accounts?
« Reply #5 on: October 16, 2013, 07:55:26 PM »
I don't mean to minimize your opinion on this manner, but if someone is coming from a place of pure conjecture and trying to determine what to do with their money for the next 30 years I'm just going to go back to what we do know now and what is not conjecture.

If we're going to start tossing out all the possible future scenarios which may affect your 30 year time frame then go ahead and build your bomb shelter now and stock it with guns, bullets, and seeds.

What examples did you come up with during your looking at history? What precedents have been set?
Well, the examples I cited in my original post have all happened in developed countries in the past 5 years.  As far as screwing savers, that's a bit more complicated.  But ultimately that is the path that every nation with unsustainable deficits has ever taken.  Inflation, capital controls, mandatory haircuts, etc.  And specific to 401(k) plans, it has been openly discussed at the federal level to nationalize portions of them (mandatory investment in treasuries has been brought up) or otherwise turn them into a social security-esque pension program, moving them from private to public ownership.  I am over simplifying all of these, but the information is out there.

Now, I understand that all private assets are at risk for some of these things.  But tax advantaged private assets have been the most attractive asset to be screwed with for the past few years.  I'm just curious if others think about this.  I have no doubt that diversification is a big part of the answer.  But I like a lot of what I've read from this community already and thought it would be good to ask about.

Matchewed, what you mention about about stocking guns, bullets and seeds... that's certainly an extreme end of the spectrum and is the answer for some.  But I ask here on MMM because I expect to get other moderate ones, as well.

arebelspy

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Re: Dangers of tax advantaged accounts?
« Reply #6 on: October 16, 2013, 08:10:03 PM »
Hi all, this is my second post here.  I came across a thread that touched on this topic but it seemed to go south and was locked.  Recognizing that it may be a touchy issue, I'm still curious about the thoughts of the community on the topic.

It's not really a touchy issue, it's that said poster in that thread refused to listen to any reason or arguments and was a troll, so there was no point in letting it keep going.

Until it got ridiculous, the thread had plenty of reasoned arguments about why it is okay to invest in a tax advantaged account.

More specifically, however, it had rebuttals to his issues, most of which were just flat out wrong.

If you have actual concerns with a 401k/IRA/etc., please post them and I'm sure people will be happy to address them.  :)
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Debbie M

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Re: Dangers of tax advantaged accounts?
« Reply #7 on: October 16, 2013, 08:20:22 PM »
I don't worry about the government changing Roth IRA rules at all.  It would be very difficult politically.  Most changes I've noticed have grandfathered money that's already been contributed.

The way I fear I would get screwed is that the government would switch over from relying on income tax (from which the Roth IRA protects me) to instituting a national sales tax or something else that retired baby-boomers could still be taxed on (from which I am not protected).

I also worry more about inflation reducing the value of money faster than my investments can keep up or that the companies I own will continue using more and more of their money to pay their bigwigs and less and less to pay their shareholders (let alone the great masses of their workers, suppliers, etc.).

If the country is in so much trouble that the government does reneg on these promises, the government will probably need the money more than I do.

Loud Noises

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Re: Dangers of tax advantaged accounts?
« Reply #8 on: October 16, 2013, 08:28:42 PM »
arebelspy,

Understood.  And that thread wasn't exactly touching on what I meant to ask here.  I just saw some common themes, which is why I referenced it. 

My concerns are pretty much out there with the two previous posts.  Basically, are other Mustachians concerned with the possibility and are certain parts of their investing approach designed to mitigate the risk?  I'm not distrustful in a broad sense, but I think it's logical to look at history and see it as a possible blueprint for the future.  The alarm has always sounded in my head when I think about how tempting it will be for our government to toy with the trillions in retirement accounts in the US as the public fiscal situation continues unsustainably.  I've been investing all my excess back in to my business until recently.  So now as I finally look at expanding further, I begin to ponder the issue as I open an IRA.

xocotl

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Re: Dangers of tax advantaged accounts?
« Reply #9 on: October 16, 2013, 09:41:13 PM »
And specific to 401(k) plans, it has been openly discussed at the federal level to nationalize portions of them (mandatory investment in treasuries has been brought up) or otherwise turn them into a social security-esque pension program, moving them from private to public ownership.  I am over simplifying all of these, but the information is out there.

Do you have any credible sources on the discussion of nationalizing 401(k) plans? I haven't heard anything of this, and a quick Google for it only turns up (a) websites that are rather clearly lying or (b) websites pointing out that the websites in group (a) are lying.

Also, you mention both in your original post and subsequently examples of savers getting screwed over (specifically in developed countries in the past five years), but never actually explicitly mention any. The only instance I'm aware of for savers getting screwed over recently was Cyprus, and in that case it was taxable accounts that got a haircut, so not a good example of why to avoid tax advantaged accounts.

jpdcpajd

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Re: Dangers of tax advantaged accounts?
« Reply #10 on: October 16, 2013, 10:37:07 PM »
Social Security (OASDI) in US Taxed going in. Originally not taxed coming out until they needed the money and now up to 85% is taxed.  Oh and the also have increased the age to receive benefits.

Loud Noises

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Re: Dangers of tax advantaged accounts?
« Reply #11 on: October 16, 2013, 11:08:51 PM »
And specific to 401(k) plans, it has been openly discussed at the federal level to nationalize portions of them (mandatory investment in treasuries has been brought up) or otherwise turn them into a social security-esque pension program, moving them from private to public ownership.  I am over simplifying all of these, but the information is out there.

Do you have any credible sources on the discussion of nationalizing 401(k) plans? I haven't heard anything of this, and a quick Google for it only turns up (a) websites that are rather clearly lying or (b) websites pointing out that the websites in group (a) are lying.

Also, you mention both in your original post and subsequently examples of savers getting screwed over (specifically in developed countries in the past five years), but never actually explicitly mention any. The only instance I'm aware of for savers getting screwed over recently was Cyprus, and in that case it was taxable accounts that got a haircut, so not a good example of why to avoid tax advantaged accounts.

Just to clarify here:
I'm not trying to convince anyone of my opinion.  I'm merely asking if anyone shares my concerns.  With that said, I'm not referencing a single news article here.  My information is a conglomerate built up over a long time.  It might sound lazy but I don't feel like finding a dozen articles and interviews and then vouching for their legitimacy.  If you have seen no evidence of what I'm talking about and it is not a concern that you take into account, that's really your answer to my question.  And that's totally cool!

I am sure that with a little bit of googling, you could find at least some of what I've referenced on credible news sites.  Keep in mind that it doesn't have to be CNN, MSNBC, etc to be credible. 

bigchrisb

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Re: Dangers of tax advantaged accounts?
« Reply #12 on: October 16, 2013, 11:20:55 PM »
I'm paranoid about the Australian Government changing the superannuation rules before i can access mine (currently 29 years away).  I believe that rules changes between now and then are almost a certainty.  That's frustrating.

However, I look at these risks balanced against the simple alternative, investing in my own name.

In exchange for some regulatory risk (and ignoring tax free withdrawals after 60), for each year the rules stay as they are, I get:
a) 15% rather than a 39.5% tax rate right now (on $25,000 pre-tax/year)
b) 15% rather than a 39.5% tax rate on earnings.

So, if they scrapped these rules in 1 years time, assuming a same 7% pre-tax annual return, and 25k/year of pre-tax income being contributed, I'd have:

Year 1:   Super $22.5k own name $15.7k =43% more if I'm in super
Year 5:   Super $127k own name $86k = 47% more if I'm in super
Year 10: Super $296k own name $191k = 55% more if I'm in super
Year 29: Super $1.64M own name $0.87M = 90% more if I'm in super

Do I think there is regulatory risk?  Absolutely.  I'm convinced the rules will change in my lifetime.  Are they going to change to my detriment by 43-90%?  I doubt it.  Hence, on balance, I make full use of Australia's retirement tax structures.  I suspect that it would work out much the same in other jurisdictions.

However, I do run my super through a self managed fund - so that I have the same level of control as if it was in my own name.


Loud Noises

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Re: Dangers of tax advantaged accounts?
« Reply #13 on: October 16, 2013, 11:46:13 PM »
Very good points, bigchrisb!

matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #14 on: October 17, 2013, 05:02:24 AM »
I don't mean to minimize your opinion on this manner, but if someone is coming from a place of pure conjecture and trying to determine what to do with their money for the next 30 years I'm just going to go back to what we do know now and what is not conjecture.

If we're going to start tossing out all the possible future scenarios which may affect your 30 year time frame then go ahead and build your bomb shelter now and stock it with guns, bullets, and seeds.

What examples did you come up with during your looking at history? What precedents have been set?
Well, the examples I cited in my original post have all happened in developed countries in the past 5 years.  As far as screwing savers, that's a bit more complicated.  But ultimately that is the path that every nation with unsustainable deficits has ever taken.  Inflation, capital controls, mandatory haircuts, etc.  And specific to 401(k) plans, it has been openly discussed at the federal level to nationalize portions of them (mandatory investment in treasuries has been brought up) or otherwise turn them into a social security-esque pension program, moving them from private to public ownership.  I am over simplifying all of these, but the information is out there.

Now, I understand that all private assets are at risk for some of these things.  But tax advantaged private assets have been the most attractive asset to be screwed with for the past few years.  I'm just curious if others think about this.  I have no doubt that diversification is a big part of the answer.  But I like a lot of what I've read from this community already and thought it would be good to ask about.

Matchewed, what you mention about about stocking guns, bullets and seeds... that's certainly an extreme end of the spectrum and is the answer for some.  But I ask here on MMM because I expect to get other moderate ones, as well.

Again you're not defining your concern. You're saying there is evidence but do not want to provide it, you have concerns but won't give specifics. It's all bogeyman talk then. That is why I brought up the extreme, because if we're going to jump at bogeymen you might as well prepare for them all.

But like others said, if you feel your opinion is fact, then don't use a tax advantaged account. You'll lose out on the actual advantages but you won't be exposed to a risk that currently is very low.

Loud Noises

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Re: Dangers of tax advantaged accounts?
« Reply #15 on: October 17, 2013, 08:01:35 AM »
I apologize that my overly general summaries are not up to your standards, matchewed.  Several posters who have seen some of the same things have shared their own thoughts on how they approach the issue.  I appreciate the handful of very thoughtful responses that many have already posted. 

Your post makes it sound like I've come here trying to convince you of something.  I haven't.  I guess I can see why the topic is indeed a sensitive one.  If my questions about a tail-risk concern instantly subject me to the inquisition, which I must pass otherwise I must be scared of the bogeyman, that's pretty ridiculous.  Indeed, I would be obligated to provide many sources of information if I came here saying, "Watch out!! This is going to happen!"  But when I came here merely asking if others are concerned in a similar way for one of many future possibilities, it's entirely different. 

Perhaps I've been sensitive in reading your responses but it comes across to me as "I don't know what you're talking about, but unless you now take it upon yourself to convince me of your view, you must just be scared of the bogeyman."  That just sounds like a rude way of saying "I haven't seen any evidence of what you're talking about and it's not something I worry about."  That would suffice.

So I'll just pretend you said that, and I'll stop with this topic.  I look forward to contributing in other ways to the MMM board.

arebelspy

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Re: Dangers of tax advantaged accounts?
« Reply #16 on: October 17, 2013, 08:07:24 AM »
So I'll just pretend you said that, and I'll stop with this topic.  I look forward to contributing in other ways to the MMM board.

That's a good attitude to have.

My guess is that it's a sensitive issue because it's normally brought up by nut job conspiracy theorists who don't listen to reason at all, and have no facts or credible sources whatsoever to back up their opinions.

Dealing with that over and over can get tiring.

So one can see why match would immediately jump to "do you actually have sources for this?" to go to the endgame - i.e. it's not a credible fear.  No offense was intended, I'm sure.

Welcome to the forums.  :)
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matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #17 on: October 17, 2013, 09:33:00 PM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

mbk

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Re: Dangers of tax advantaged accounts?
« Reply #18 on: October 17, 2013, 09:42:55 PM »
IMO, tax advantaged accounts are a designed to promote savings macroeconomically.
Its a deal to individual savers. Savings here is a misnomer in some sense, unless your 401k has 100 % bonds or cash sitting in interest yielding accounts. Most of the money is invested in stocks.

Suppose your concerns are justified and government raids your 401k; whats stopping it from raiding brokerage accounts? And a government can nationalize the companies as well, wiping out all the investors.

I am from India where nationalization (of banks, mines...) happened in 70s. But, now these things are rare (except Argentina). In these types of scenarios, it doesn't matter what kinds of avenues you use to invest your savings. Your savings can vanish. Even keeping cash is useless, because government can institute capital controls, issue new currency notes and make old ones invalid unless converted to new ones. Also inflation will be so high, you want to use alternative currencies.

But in developed and western countries, you don't have to worry about these things.
If you do, you are worrying too much and missing out a deal. Also in a country like USA, which prints the world's reserve  currency, the probability of such a scenario happening is much less when compared to the rest of the world.

NWOutlier

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Re: Dangers of tax advantaged accounts?
« Reply #19 on: November 26, 2013, 02:06:56 PM »
Hi Everyone,

I'm going to go WAY out in left field.... ;o).  for "me" taxable accounts are my early retirement (most important to me) - yet, 401k, spousal IRA, ROTH IRA, HSA all take priority over the taxable account....  So, the most important to me is the least important on priority.  I agree that you should make your investments based on knowledge of what is going to happen to them, but - it 'sounds' like a lot of the discussion are items or things outside of our control.... Yes.. .'something' could happen, taxes 'could change', somewhere in developing countries 'this thing happened' ... you're doing the right thing making sure you follow real world situations.. yet, they are out of our control... this is why we invest into many options, taxable, tax deferred, real-estate, etc...

Now  - I didn't come to a conclusion on the above - but.... let me share this; I have a friend that has always made less money than me... (10's of thousands per year less)... I am the guy that invested in individual stocks, 401k's, IRA's.... 

My friend - never invested in the market, no 401k's, no IRA's, no debt (outside of his home) - pays cash for his vehicles, toys, life, etc...  at this point in my life; he owns 2 properties paid for in full (one rental, one 20 acre with a house) and his primary residence that he put 50% down payment on... no debt (except his primary residence)... from a net worth perspective - he's worth more...

I have one home (my primary) and investments... 401k, spousal IRA, Traditional IRA, taxable account and pension....  there are so many scenarios out there.... keep it simple... for 'your' needs.

Thanks for sharing.

Steve

KingCoin

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Re: Dangers of tax advantaged accounts?
« Reply #20 on: November 26, 2013, 02:35:33 PM »
Now  - I didn't come to a conclusion on the above - but.... let me share this; I have a friend that has always made less money than me... (10's of thousands per year less)... I am the guy that invested in individual stocks, 401k's, IRA's.... 

My friend - never invested in the market, no 401k's, no IRA's, no debt (outside of his home) - pays cash for his vehicles, toys, life, etc...  at this point in my life; he owns 2 properties paid for in full (one rental, one 20 acre with a house) and his primary residence that he put 50% down payment on... no debt (except his primary residence)... from a net worth perspective - he's worth more...

Given that returns have been very positive for consistent investors over the last couple decades, I would suggest that your friend is worth more because he saves at a much higher rate or has acquired money through other channels. I'm not sure that this implies anything about the topic at hand (though choosing a path of high savings is certainly a base tenant of mustachians).

Khan

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Re: Dangers of tax advantaged accounts?
« Reply #21 on: November 26, 2013, 08:11:00 PM »
When I was in the Navy, I didn't pay any attention to the tax advantaged accounts not because of regulatory worries or concerns about future governments, but because of the age requirement. I didn't want all my money locked up till I'm in my 60's.

Now I'm not so worried about that, because I understand the rules of the ROTH IRA, and the 401k - roth pipeline. One thing you need to understand is the contribution limits to these accounts is really low in the grand scheme of things. 5500 dolllars a year? 17.5k? These are nothing, and as much as our government loves the rich, I can't imagine a scenario in which they would fuck up the rules for the middle class(and rile the masses), and ignore things like Romney's tax advantaged schemes.

I likely won't FIRE with more then 50% of my net worth in my 401k, because I like taxable investment account money and the freedom it has, but that's just a personal preference.

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Re: Dangers of tax advantaged accounts?
« Reply #22 on: November 28, 2013, 03:26:02 AM »
I hedge my risk by contributing to many different types of accounts.

- 401k - Tax-free going in, taxable coming out. Worst case: I'm not sure... raising the age to take the money out? I can't see the government charging more taxes on the way out.
While it is an extreme, it is theoretically possible for government to tax what's in there all at once, at a very high rate perhaps. I cannot find the article now but I remember reading about this being done in some other country or being discussed in another country. 

- Roth IRA - Taxed money going in, tax-free coming out - Worst case (IMO): Increasing the age of withdrawal and/or a small capital gains tax.  There would be absolutely no reason to put money into this account if the government decides that it's no longer tax-advantaged... so I'm not sure what they'd do to hurt this account. 
I think if Roth IRA became considered to be "part of the problem" that government would indeed tax some of the principal. That's more likely than any hit on 401(k)s or tIRAs.

CDP45

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Re: Dangers of tax advantaged accounts?
« Reply #23 on: December 02, 2013, 11:38:35 PM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

I got to call you out on this one because I don't think you're too dumb to use google, so I think you're giving him a hard time even though his concerns do have some basis. He seems a little scared, so it would probably be more helpful to him to state your reasons and evidence why we should trust the 401k and Roth etc.. Remember, not everyone is a smarty pants liberal statist that listens to NPR to learn the most updated propaganda.

A simple google search reveals Poland just nationalized private retirement account in the past 2 months In the NYT man: http://www.nytimes.com/2013/10/10/business/international/polish-plan-on-pensions-arouses-sharp-criticism.html?_r=0

Argentina nationalized in 2008, Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US. (Don't get me started on how our dividend investor brethren must feel during this ZIRP, probably a little robbed).

MMM holds himself to a high standard of honesty, so let's follow that example and help this guy out.

Argyle

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Re: Dangers of tax advantaged accounts?
« Reply #24 on: December 02, 2013, 11:49:18 PM »
The question is: do I worry about these things?  No.  I do not.  Cyprus, Poland, and Argentina don't seem like countries the U.S. will be emulating to me.  And if these things should happen, despite their unlikeliness, well, I guess i'll be out some money.  But I'll still be in a heck of a lot better position than people who are spending up to the hilt and not saving at all.  I seriously doubt these bad things will happen; and I'll be okay even in the unlikely event that they do.

Khan

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Re: Dangers of tax advantaged accounts?
« Reply #25 on: December 02, 2013, 11:53:32 PM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

I got to call you out on this one because I don't think you're too dumb to use google, so I think you're giving him a hard time even though his concerns do have some basis. He seems a little scared, so it would probably be more helpful to him to state your reasons and evidence why we should trust the 401k and Roth etc.. Remember, not everyone is a smarty pants liberal statist that listens to NPR to learn the most updated propaganda.

A simple google search reveals Poland just nationalized private retirement account in the past 2 months In the NYT man: http://www.nytimes.com/2013/10/10/business/international/polish-plan-on-pensions-arouses-sharp-criticism.html?_r=0

Argentina nationalized in 2008, Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US. (Don't get me started on how our dividend investor brethren must feel during this ZIRP, probably a little robbed).

MMM holds himself to a high standard of honesty, so let's follow that example and help this guy out.

If you're so worried about the 'liberal statists' and the giant 'NPR propaganda machine', then I have one piece of advice for you, hide your money under your mattress, and go group think on some Alex Jones forum, please.

Khan

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Re: Dangers of tax advantaged accounts?
« Reply #26 on: December 03, 2013, 12:12:49 AM »
Cyprus seized bank accounts because it was a tax sheltered island heavily investing in Greek bonds with foreign money(and that was the primary industry, - banking), so an incredibly odd case with almost no relation to the US. It also did this as part of a bailout package with the EU, and I'd rather deal with the devil then the EU myself.
http://www.npr.org/blogs/money/2013/03/18/174619914/where-the-bank-really-keeps-your-money

Argentina nationalized industries to bring those profits to their own people(or the ruling class), either way you want to look at it, it was terrible for foreign investors most of all. It'd be the equivalent of Bank of America being 90% owned by Dubai, and us taking it from them.
http://www.nytimes.com/2012/04/19/world/americas/dismay-over-argentinas-nationalization-plan.html

And lastly, Poland. Poland is the only part of your argument with any merit. However, it appears to be a move in order to allow the Polish government to create new debt. A terrible, inept government performing legal maneuvering around it's own rules(55% debt to GDP). Sounds like it should be PPIIGS.
http://www.forbes.com/sites/steveforbes/2013/09/17/polands-piggish-pols-theyre-not-alone/

matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #27 on: December 03, 2013, 05:22:01 AM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

I got to call you out on this one because I don't think you're too dumb to use google, so I think you're giving him a hard time even though his concerns do have some basis. He seems a little scared, so it would probably be more helpful to him to state your reasons and evidence why we should trust the 401k and Roth etc.. Remember, not everyone is a smarty pants liberal statist that listens to NPR to learn the most updated propaganda.

A simple google search reveals Poland just nationalized private retirement account in the past 2 months In the NYT man: http://www.nytimes.com/2013/10/10/business/international/polish-plan-on-pensions-arouses-sharp-criticism.html?_r=0

Argentina nationalized in 2008, Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US. (Don't get me started on how our dividend investor brethren must feel during this ZIRP, probably a little robbed).

MMM holds himself to a high standard of honesty, so let's follow that example and help this guy out.

Yeah you can step back from the not so subtle insults please, that's just ad hominem and doesn't add anything.

What does MMM's standards of honesty have to do with this discussion (hint nothing and it's just a poor attempt at an appeal to authority)?

Other than the possibility that the OP is from Poland, which I doubt since we've been discussing Roth IRA's from the beginning, the rest of your post has no bearing on the US. Where in the US is this frightening move to nationalize the bonds in your private pension like Poland is proposing? And as Khanjar noted the Cyprus move is in no way related to retirement accounts.

So call me out all you want, much like I said before, if you have concerns with some substance behind them I'm all ears to listen. If you've got bogeymen... not so much.

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Re: Dangers of tax advantaged accounts?
« Reply #28 on: December 03, 2013, 05:53:13 AM »
While it is an extreme, it is theoretically possible for government to tax what's in there all at once, at a very high rate perhaps. I cannot find the article now but I remember reading about this being done in some other country or being discussed in another country.
I got to call you out on this one because I don't think you're too dumb to use google, so I think you're giving him a hard time even though his concerns do have some basis. ... A simple google search reveals Poland just nationalized private retirement account in the past 2 months In the NYT man: http://www.nytimes.com/2013/10/10/business/international/polish-plan-on-pensions-arouses-sharp-criticism.html?_r=0

Argentina nationalized in 2008, Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US.
Thanks for filling in the gaps in my memory.

CDP45

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Re: Dangers of tax advantaged accounts?
« Reply #29 on: December 03, 2013, 08:24:00 AM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

Yeah you can step back from the not so subtle insults please, that's just ad hominem and doesn't add anything.

What does MMM's standards of honesty have to do with this discussion (hint nothing and it's just a poor attempt at an appeal to authority)?

Other than the possibility that the OP is from Poland, which I doubt since we've been discussing Roth IRA's from the beginning, the rest of your post has no bearing on the US. Where in the US is this frightening move to nationalize the bonds in your private pension like Poland is proposing? And as Khanjar noted the Cyprus move is in no way related to retirement accounts.

So call me out all you want, much like I said before, if you have concerns with some substance behind them I'm all ears to listen. If you've got bogeymen... not so much.

Are you not a liberal statist? Do you not listen to NPR regularly? Did you just copy and paste from the argument pages from Wikipedia? Yes I'm calling to question your honesty on this subject because there are multiple examples of confiscation if retirement accounts easily found.

What did I just wrote above? Many people only save for retirement in bank accounts,  so when they are confiscated they also take peoples retirement, so yes it's very much related. I just posted 3 examples from 3 different countries in the past decade! Clearly it's happened and not a bogeyman!

My concern is you dismissing this new guy asking for help and dishonestly dismissing his concerns.

Yes there are examples in the US, do I think they are of large enough concern not to invest? No. Let's take shareholders of WaMU, wiped out because the gov said so. I think some bond holders too..

matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #30 on: December 03, 2013, 08:40:04 AM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

Yeah you can step back from the not so subtle insults please, that's just ad hominem and doesn't add anything.

What does MMM's standards of honesty have to do with this discussion (hint nothing and it's just a poor attempt at an appeal to authority)?

Other than the possibility that the OP is from Poland, which I doubt since we've been discussing Roth IRA's from the beginning, the rest of your post has no bearing on the US. Where in the US is this frightening move to nationalize the bonds in your private pension like Poland is proposing? And as Khanjar noted the Cyprus move is in no way related to retirement accounts.

So call me out all you want, much like I said before, if you have concerns with some substance behind them I'm all ears to listen. If you've got bogeymen... not so much.

Are you not a liberal statist? Do you not listen to NPR regularly? Did you just copy and paste from the argument pages from Wikipedia? Yes I'm calling to question your honesty on this subject because there are multiple examples of confiscation if retirement accounts easily found.

What did I just wrote above? Many people only save for retirement in bank accounts,  so when they are confiscated they also take peoples retirement, so yes it's very much related. I just posted 3 examples from 3 different countries in the past decade! Clearly it's happened and not a bogeyman!

My concern is you dismissing this new guy asking for help and dishonestly dismissing his concerns.

Yes there are examples in the US, do I think they are of large enough concern not to invest? No. Let's take shareholders of WaMU, wiped out because the gov said so. I think some bond holders too..

No I'm not a liberal statist, no I don't listen to NPR with anything resembling regularity. Those are discussions about me and my personal traits and habits. That has no relevancy to the discussion. Stop trying to discredit my points that this entire discussion is based on conjecture by discrediting me.

No where in your previous post did you write that people were saving for retirement in savings accounts. It'd be a pretty terrible strategy to begin with in the US, so again I have to raise some skepticism to the connection between Cyprus and our Roth IRA's.

I'm dismissing speculation. And I'm not being dishonest about it. Stop attacking me and stay on the argument, I'd really prefer not to have moderators involved in this.

Also if WaMu is your only example of US nationalization dangers don't you find it a weak one since it was doled out to Chase (a private company)? And again what does this have to do with tax advantaged accounts? A savings account is not a tax advantaged account. Where is this apparent danger of our tax advantaged accounts being robbed?

CDP45

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Re: Dangers of tax advantaged accounts?
« Reply #31 on: December 03, 2013, 09:50:15 AM »
If you're so worried about the 'liberal statists' and the giant 'NPR propaganda machine', then I have one piece of advice for you, hide your money under your mattress, and go group think on some Alex Jones forum, please.

My dear quisling Khanjar, Iím an evil capitalist who believes in free markets and early retirement, why would I bury my money and not even get interest on it? Nay, I would like to reap where I did not sow.

I worry about the liberal statists like I worry about consumerists, no threat to me really, but I believe those mentalities won't bring happiness, so I try and advise towards more productive efforts.

CDP45

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Re: Dangers of tax advantaged accounts?
« Reply #32 on: December 03, 2013, 10:04:36 AM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

No I'm not a liberal statist, no I don't listen to NPR with anything resembling regularity. Those are discussions about me and my personal traits and habits. That has no relevancy to the discussion. Stop trying to discredit my points that this entire discussion is based on conjecture by discrediting me.

It was relevant as the OP was questioning government intentions to steal even more from the people, and that really irks statists so you could have been letting your beliefs cloud your responses, so I am glad to hear you disavow those stupid ideologies.

Quote
No where in your previous post did you write that people were saving for retirement in savings accounts. It'd be a pretty terrible strategy to begin with in the US, so again I have to raise some skepticism to the connection between Cyprus and our Roth IRA's.

Yes I did: "Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US."
Quote
I'm dismissing speculation. And I'm not being dishonest about it. Stop attacking me and stay on the argument, I'd really prefer not to have moderators involved in this.


Also if WaMu is your only example of US nationalization dangers don't you find it a weak one since it was doled out to Chase (a private company)? And again what does this have to do with tax advantaged accounts? A savings account is not a tax advantaged account. Where is this apparent danger of our tax advantaged accounts being robbed?

There is a threat of regulatory/nationalization risk, but I'm in agreement at this point with you that it's small and isn't preventing me from investing, and I think we can encourage the OP to do the same without spitting acid at him.


matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #33 on: December 03, 2013, 10:32:04 AM »
Pardon my brusqueness. This topic has been one I've bloodied my forehead over with an alarming frequency. It is generally why I always add people are free to do as they choose to ease the acid I'm spitting. :)

No I'm not a liberal statist, no I don't listen to NPR with anything resembling regularity. Those are discussions about me and my personal traits and habits. That has no relevancy to the discussion. Stop trying to discredit my points that this entire discussion is based on conjecture by discrediting me.

It was relevant as the OP was questioning government intentions to steal even more from the people, and that really irks statists so you could have been letting your beliefs cloud your responses, so I am glad to hear you disavow those stupid ideologies.

Quote
No where in your previous post did you write that people were saving for retirement in savings accounts. It'd be a pretty terrible strategy to begin with in the US, so again I have to raise some skepticism to the connection between Cyprus and our Roth IRA's.

Yes I did: "Cyprus had a special bank theft on savings accounts, and many people in the world only have access to banks for investing and those routinely shut taking with them hard earned savings. It's a real concern with hundreds of examples in this century, luckily not as much in the US."
Quote
I'm dismissing speculation. And I'm not being dishonest about it. Stop attacking me and stay on the argument, I'd really prefer not to have moderators involved in this.


Also if WaMu is your only example of US nationalization dangers don't you find it a weak one since it was doled out to Chase (a private company)? And again what does this have to do with tax advantaged accounts? A savings account is not a tax advantaged account. Where is this apparent danger of our tax advantaged accounts being robbed?

There is a threat of regulatory/nationalization risk, but I'm in agreement at this point with you that it's small and isn't preventing me from investing, and I think we can encourage the OP to do the same without spitting acid at him.
No my personal views are not relevant to a discussion that amounts to a fear based response to pure conjecture. Whether I am a statist or not has no bearing on my actual points, whether I listen to NPR or not has no bearing on my points. Focus on the points not the person behind them. Keeps the ratio of dick/valuable comments low.

What you're quoting still does not discuss retirement accounts, I get that a savings account has a place in most financial plans but it is still not a tax advantaged account. That is why I don't think it's relevant to this discussion. The OP raised concerns about tax advantaged accounts being raided by the US government and so far the defense of that has been about Poland's nationalization of their federal bonds (honestly a strategy that can't work for the US regardless due to our Treasury bonds being such a big presence in financial markets), and Cyprus which has little to nothing to do with tax advantaged accounts.

Where is the threat?

Regardless of my previous comment I did not spit acid I was just apologizing since the OP seemed to take some offense. I'm discounting speculative fear based on the fact that... it is just speculative fear with no actual data or facts to back it up. Show me legislation that has been proposed and has a good chance of passing that is raiding our 401k's, Roth IRA's...etc. and then I'll give credence to the fear that you have towards a government takeover of already federally regulated accounts. If asking for details and evidence to support assertions amounts to spitting acid then I spray a damn hose of HF.

*edit* Minor edits and a note below
And I think I'm just done with this conversation as you seem so hell bent on lobbing veiled insults that people who have other opinions than yours are stupid (still ad hominem).
« Last Edit: December 03, 2013, 10:41:28 AM by matchewed »

JohnGalt

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Re: Dangers of tax advantaged accounts?
« Reply #34 on: December 03, 2013, 10:38:10 AM »
Let's lay off the personal attacks guys. 

CDP45

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Re: Dangers of tax advantaged accounts?
« Reply #35 on: December 03, 2013, 11:08:14 AM »
Quote
No my personal views are not relevant to a discussion that amounts to a fear based response to pure conjecture. Whether I am a statist or not has no bearing on my actual points, whether I listen to NPR or not has no bearing on my points. Focus on the points not the person behind them. Keeps the ratio of dick/valuable comments low.

[Moderator removed personal attack]


Quote
What you're quoting still does not discuss retirement accounts, I get that a savings account has a place in most financial plans but it is still not a tax advantaged account. That is why I don't think it's relevant to this discussion.

He's trying to figure out the best place to invest for retirement and manage regulatory risk, yes it's relevant. The question of the topic is really "Dangers of government raiding."

The OP raised concerns about tax advantaged accounts being raided by the US government and so far the defense of that has been about Poland's nationalization of their federal bonds (honestly a strategy that can't work for the US regardless due to our Treasury bonds being such a big presence in financial markets), and Cyprus which has little to nothing to do with tax advantaged accounts.

Where is the threat?

And I did not spit acid, I'm discounting speculative fear based on the fact that... it is just speculative fear with no actual data or facts to back it up. Show me legislation that has been proposed and has a good chance of passing that is raiding our 401k's, Roth IRA's...etc. and then I'll give credence to the fear that you have towards a government takeover of already federally regulated accounts. If asking for details and evidence to support assertions amounts to spitting acid then I spray a damn hose of HF.

Thank you for reminding me! Given the continual abuses of government against the American people, it's hard to remember everything. Yes please reference Jefferson Co Alabama, or  Central Falls, R.I. Yes the OP specifically named tax advantaged, but the real risk is government had, can, and probably will change the rules in the future, and probably not for the benefit of the people.
« Last Edit: December 03, 2013, 11:38:02 AM by bo_knows »

matchewed

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Re: Dangers of tax advantaged accounts?
« Reply #36 on: December 03, 2013, 11:30:44 AM »
Quote
No my personal views are not relevant to a discussion that amounts to a fear based response to pure conjecture. Whether I am a statist or not has no bearing on my actual points, whether I listen to NPR or not has no bearing on my points. Focus on the points not the person behind them. Keeps the ratio of dick/valuable comments low.


[Moderator removed personal attack]

Quote
What you're quoting still does not discuss retirement accounts, I get that a savings account has a place in most financial plans but it is still not a tax advantaged account. That is why I don't think it's relevant to this discussion.

He's trying to figure out the best place to invest for retirement and manage regulatory risk, yes it's relevant. The question of the topic is really "Dangers of government raiding."

The OP raised concerns about tax advantaged accounts being raided by the US government and so far the defense of that has been about Poland's nationalization of their federal bonds (honestly a strategy that can't work for the US regardless due to our Treasury bonds being such a big presence in financial markets), and Cyprus which has little to nothing to do with tax advantaged accounts.

Where is the threat?

And I did not spit acid, I'm discounting speculative fear based on the fact that... it is just speculative fear with no actual data or facts to back it up. Show me legislation that has been proposed and has a good chance of passing that is raiding our 401k's, Roth IRA's...etc. and then I'll give credence to the fear that you have towards a government takeover of already federally regulated accounts. If asking for details and evidence to support assertions amounts to spitting acid then I spray a damn hose of HF.

Thank you for reminding me! Given the continual abuses of government against the American people, it's hard to remember everything. Yes please reference Jefferson Co Alabama, or  Central Falls, R.I. Yes the OP specifically named tax advantaged, but the real risk is government had, can, and probably will change the rules in the future, and probably not for the benefit of the people.

Ah so you don't really want to discuss what the OP brought up and instead want to argue over ideological battle lines. Yeah like I said I'm done.
« Last Edit: December 03, 2013, 11:39:05 AM by bo_knows »

bo_knows

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Re: Dangers of tax advantaged accounts?
« Reply #37 on: December 03, 2013, 11:40:15 AM »
This thread has gone off the rails.  Locked.