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

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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…

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