Bob Chapman The International Forecaster Blog

Bob Chapman The International Forecaster Blog

By Bob Chapman, May 11th, 2011.In legislation just proposed, and I don't know by whom, nor do I have a number yet, the Dept of Labor has proposed a re-definition of who is a fiduciary, not under the Securities laws, but under ERISA, the law that governs tax advantaged retirement accounts, such as 401K and IRAs and it probably will include all retirement assets, we don't have a definite direction yet of what they intend to do but it is my guess they want to limit those investments only to US government debt. They may include some blue chips or funds, I don't know. They may allow other high-graded fixed income products. These DOL-ERISA rules override all SEC rules. We don't know the final form of the legislation, nor do we know whether it will be passed, but my guess it will be. The government desperately needs to get those retirement funds invested in government debt. I would seriously think about terminating 401ks and IRAs by transferring the assets -- without commission -- into a personal account it then becomes a taxable event. I also believe there is a good chance that taxes will be higher next year. There is also an outside chance that retirement assets could be frozen -- such events would be negative on the general market because government would be directing brokerage houses to sell retirement assets. This is all in the planning stage, but it is very real.
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