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Hidden IRA Rules Limit Investment Choices

 

Mainstream media continues to state that traditional IRAs are tax deferred until retirement. Well, that depends. If your IRA owns mortgage-leveraged real estate, you owe UBIT.  If your IRA or 401(k) owns an active business structured as a pass through entity (such as an LLC or partnership), you owe UBIT.  UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS.

 

Gold is a very popular investment these days. Is it possibble to own collectibles such as art, coins, and  physical gold inside an IRA? No. When an IRA purchases a collectible, the amount used to make the purchase is treated as distribution to the owner. It is included in the owner's gross income, and if the owner is under age 59½ and does not qualify for one of the exceptions, a 10% early distribution penalty is imposed on top of the income taxes.

Opt Out of Social Security and Get a Lump Sum Payment

Of course you can't do that because that would save the government literally trillions of dollars!

Take me as an example. I have paid in $69,058 as of 1/1/2011. This includes the employer portion back in my wage slave days. Assume I could request a check for that amount right now.

Assume I live to 75 (male life expectancy from wiki) and retire at 62. I would receive $828 every month for 156 months. That is $129,168.

Differnce of $60,110. Over the next 20 years, 74 million boomers will retire. Total cost differential = $4,448,140,000,000!!!!!!!

FIRECALC = Can You Retire Early?

Thinking of chucking it all and retiring early, long before you start getting a pension or Social Security, and before you have ready access to your 401k and IRA?

Better run through this calculator and get a dose of reality.  http://www.firecalc.com/

How Much Money Will I Need for Retirement?

Retire

You may have heard that once you retire you’ll be able to live on 70-80% of your pre-retirement income. However, considering medical costs are rising and life spans are increasing, you’re likely to need 100% of your pre-retirement income in retirement.

Since it’s likely you’ll live a long life you need to keep a higher percentage of your assets in equity investments. Consider subtracting your current age from 110. The result could be considered a starting point for your equity allocation. For example, if you are 65 consider allocating 45% of your portfolio to equity investments (110-65 = 45) and allocate 55% to fixed income investments.

Also be sure to determine the best retirement age for collecting social security benefits

Health Care Hydrogen Bomb

People will spend down their assets and apply for Medicaid in record numbers very soom!

1. Health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.
2. The cost of a health insurance policy for the average American family rose by a whopping 9 percent last year. The average family health insurance policy now costs over $15,000 a year.
3. An all-time record 49.9 million Americans do not have any health insurance at all at this point, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.
4. Medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.  Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

Fixing The Economy Without Austerity Measures

The easiest way is to simply ask the banksters for our $16 tillion back. But since the banksters rule the world, I guess we won't get that!

 

 

Social Security
Means test benefits. If you made twice the median salary (approximately $33,000) in your last 5 years of employment, you  get reduced benefits.
Eliminate the income limits. Why should you stop paying in just because you made more than $106,800? There are no income limits on medicare.
Do not raise the retirement age. This will only exacerbate the unemployment problem as fewer job openings will occur.

Revenues
Legalize and tax marijuana. That may be $40 billion to $100 billion in new revenue!
Legalize and tax sports betting. Although only 35 states currently allow "gaming", that number is sure to grow. Adding $50 million to a state budget will help to eliminate the need for federal dollars.

Economic Growth
A natural gas based economy. Get fleet vehicles and 18 wheelers running CNG. Get Detroit making those vehicles. And export LNG to other countries (USA nat gas is $3.76 but it can be liquified and sold at $16).

Social Security Mistakes

Did you know that that the Social Security Administration (SSA) makes mistakes on at least 3 percent of the total official earnings records!

Social Security benefits are based on your 35 highest-earning years as reported to the government by your employers. If an employer has given the government incorrect salary data or if the government has erred in recording the information, you want to get it corrected as quickly as possible.

Two other factors that can cause mistakes are if you changed your name following a marriage or divorce, or if your date of birth in SSA records isn't the same as it appears in IRS files. Double check your SSA statement for these possible mishaps and make sure your earnings data matches the amounts on your W-2 forms.

SSA statements are mailed annually (about three months before your birthday) to everyone age 25 and over who is not already receiving Social Security benefits. If you're not receiving yours, see http://www.ssa.gov/mystatement.