In my last video, I warned folks about Wall Street’s likely attempt to weaponize the Coronavirus panic in service of their financial interests. I also noted that Goldman Sachs has cultivated such a close relationship with the federal government that it managed to completely destroy a competitor (Lehman Brothers) during the bailout negotiations of 2008.
But there is more. As markets reel from the virus’ impact, our lovely friends have released an updated report on U.S. GDP for the second quarter, suggesting an upcoming 24 percent drop.
How convenient. Sounds like a great way to further tank the economy, allowing the Goldmanites freedom to make a killing on shorting strategies, plus accumulate dirt cheap shares.
Now hold on, the skeptic might say, what happens if the market declines so Goldman Sachs is also in trouble?
It’s quite simple. They just give a ring to the Treasury Department, led by none other than Steven Mnuchin, the retired Chief Information Officer for Goldman.
If you watch your 401k undergo further decline in the following weeks, just remember who is walking in “Fields of Gold.”
I have a general rule for life in the United States: anything which saves you money is eventually removed.
A few of you may know about the passage and signing of the SECURE Act in December 2019. This drama-free legislation made some interesting reforms to retirement plan rules, allowing Americans to make certain penalty-free (but not tax-exempt) withdrawals for qualifying reasons, and also lengthened the timeline under which required minimum distributions (RMDs) must be taken by retirees.
That all sounds good, but there is something else to the story. A separate shift in distribution laws could leave you seriously screwed down the road where taxes are concerned.
Under previous rules, people who inherited an IRA from their parents had the liberty of “stretching” RMDs over the course of their own lifetimes, thus reducing the taxes paid on that money and building inter-generational wealth. Not anymore.
The SECURE Act upends this tradition by placing a 10-year distribution requirement on such inheritance IRAs. So if your parent dies and hands over an account with $500,000, you would need to withdraw something like $50,000 annually to spread it out over that period, or take the lump sum. In either case, taxes will be high.
Perhaps the rule won’t be so horrible for folks who inherit at the age of eighteen, but for others it is bad news. Imagine pulling in a six-figure salary at age 45 and having to stack $50,000 on top of that. Your taxes will giggle with delight.
A broader issue relates to how America prevents people from building wealth if they are not extremely rich. Under current tax laws you can even be penalized for making too much while also maxing out a Roth IRA, and few lucrative deductions are available for middle class people. The SECURE Act is just a garnish on that system.