Exactly What Happens When You Cash Out an IRA or 401k


With the introduction of the new MyRA by President Obama in his state of the union speech on 1/28/14, many people are up in arms about their retirement accounts. Many in the alternative media have been warning about this for years, as have non-corrupt Govt officials (Ron Paul- likely the only one), as have other financial experts. We have referenced these warnings, videos, and articles on our blog, click HERE.

The concern of Govt bail in into retirement accounts is a real possibility, and getting more real every day. I doubt they will cease funds, rather introduce a new “Save America Bond,” or something similarly named doused with propaganda semantics. I believe these will be a forced investment vehicle and the individual will by law have to contribute a percentage of his or her retirement fund into this bond program. According to well-known sources Legislation is already on the table. However, there is a solution to ‘jailbreak’ your retirement account from the clutches of the Govt and commercial banking system, and that solution is the conversion to an IRA LLC.

As this fear of confiscation escalates many people are considering cashing out their retirement accounts, paying taxes and penalties. Let me clarify the legal specifics and tax ramifications. If you withdraw prior to age 59 ½ there is a 10% penalty AND the entire withdrawal is taxed as regular income, regardless of the account’s cost basis. This can be extremely costly for even a small IRA cash out. Let’s use an example:

Mr. Jones is age 50
IRA Value is $100,000 (cost basis is irrelevant)
Fed Tax Burden is $21,175 (using 2014 bracket #s assuming he has NO other income)
State Tax Bracket 5.3%
Early Withdrawal $100,000
Penalty $10,000
Taxes approx $26,475

The withdrawals are taxed as regular income. Mr. Jones would have to pay over $36,475 of his $100,000 withdrawn; only retaining $63,525.

This is why we have been beating the drums about the benefits of the IRA LLC. If you convert your IRA to an IRA LLC you can take physical possession of gold, silver, or platinum. You can even hold cash. You can hold foreign currencies, stocks, almost anything. Just no collectibles and no life insurance contracts. You must also comply with “arms length” transactions.

Sounds great, what’s the catch? How much does this cost? The upfront cost can range from $1,500 to $3,000 to have an attorney or professional facilitator set one of these up, and the proper setup is crucial. Involved are numerous legal documents, affidavits, and compliance requirements that must be met.

We facilitate the entire process for $1,895, moving forward you actually save money as your annual fees are far less than they were in your traditional IRA. If you are interested in learning more or simply have some questions you would like answered, don’t hesitate to call, email or visit our website for more information.

Will Lehr


3 thoughts on “Exactly What Happens When You Cash Out an IRA or 401k

  1. Pingback: Exactly What Happens When You Cash Out an IRA or 401k | Don't Tread On Me

  2. Pingback: A Bird in the Hand is Worth Two in the Vault | Perpetual Assets

  3. Pingback: A Bird in the Hand is Worth Two in the Vault | Perpetual Assets | Perpetual Assets | Precious Metals IRA, Silver Debit Card

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