[The following post is by TDV Editor-In-Chief, Jeff Berwick]

Tomorrow in the US is the last day for tax slaves to pay their extortion fees.  It’s a day, as a Permanent Tourist/Prior Taxpayer (PT), on which I remember how lucky I am to legally not have to pay income tax in any jurisdiction.  But, I realize it is a painful day for many.  In a way it is painful for me, also, to know that millions are being forced at gunpoint to hand over a large amount of their income to the biggest terrorist organization on Earth (the definition of terrorism being “the use of violence and threats to intimidate or coerce, especially for political purposes”), the US federal government.

Unfortunately, millions are still subject to this tyrannical organization and have to find any way possible to reduce their tithe.

One of the popular ways to lower your extortion (tax) burden is to roll some portion of your income into an IRA each year which then becomes tax deductible until it is withdrawn at a later date.

Based on your own personal situation this may or may not have been something reasonable to consider in the past.  But, in my estimation, people should stay away from putting more funds into an IRA.  The reason being is that the US government is now very close to complete bankruptcy and un-taxed funds in IRAs (some estimates have it over $18 trillion currently in IRAs) will become sitting ducks for the US government to seize or take-over to stay afloat.  Barack Obama made the first pretext to this earlier this year with the launch of MyRA which would be an IRA held entirely in government debt.

As well, the US government’s fiscal situation does nothing but get worse year-after-year and if any attempt is to be made to continue to look solvent then tax rates will have to rise.  This means that you will have put the funds in at a lower tax rate only to withdraw them later at a higher tax rate.  Alternatively, and more likely, as the government becomes more insolvent they will likely demand that IRAs be invested in government debt to keep it solvent and then inflation, or hyperinflation, will erode away any paltry nominal gains made on the interest.

So, I suggest you think very carefully about putting your funds into an IRA at this time.

Now, for those who already have funds in an IRA, here are some options to consider:

Withdraw The Funds.  Why withdraw them?  For the reasons laid out above.  IRA funds are sitting ducks. Can you withdraw them?  There are differing rules on types of IRAs but you can usually withdraw them IF you pay the income tax due when you withdraw (which will be deemed as part of your income for that year) and usually a 10% penalty if you are younger than 59.5 years old.  If you are older than 59.5 there is no 10% penalty.

Self-Directed IRA.  If you don’tt want to or cannot withdraw your funds from an IRA then consider a self-directed IRA (you can get more info on a Self-Directed IRA here).

In a regular IRA you are usually limited to owning only stocks, bonds or mutual funds.  Stocks are nearing the end of a bull market and if they do go higher it will be due to money printing… which means any gains won’t be real gains as the price of everything will be rising.

Bonds are a nearly sure-thing loser with interest rates in most Western countries near 0% and some even now into negative interest and as interest rates rise, the value of bonds falls.  And mutual funds usually just hold stocks and bonds.  With a self-directed IRA you can own a much wider array of assets… and, more importantly, they can be anywhere in the world and not just in the US.

As example, you could buy an investment property anywhere in the world and hold it in your self-directed IRA.  With the US dollar up against almost every other currency at the moment it is a fantastic time to bargain hunt for foreign real estate bargains.

As just one example, at AcaCondos, a company I founded nearly a decade ago, you can buy beach front condos in Acapulco for under $70,000 and it is 100% managed and rented out for you with ROIs often exceeding 5% per annum after all costs and would qualify to be held in a self-directed IRA.  Other things you can own in a self-directed IRA include almost any asset including precious metals stored abroad.

A Precious Metals Only IRA. A self-directed IRA is a bit more complex and so if you just want to put your funds into a specially designed IRA that is held in precious metals, check out the Hard Assets Alliance “SmartMetals IRA”.  It is an all-in-one IRA that is fast and easy and can have your IRA converted into precious metals held offshore quickly and easily.  You can get more information on that here.

As I’ve said before, the coming years will be the most dangerous time in history for human capital.  Ignore pretty much everything you hear on CNBC and from most government registered financial advisors.  You are going to have to take control of your own financial future to have a reasonable chance of surviving the coming collapse.

Not many out there call a spade a spade as I do and pull no punches.  I’m doing it, to some extent, as a bit of “tough love” to those who still don’t realize that what worked in the past few decades will NOT work in the next few decades… or more likely years… or even months.

Self-actualization is paramount and taking at least a modicum of control of your assets now will give you at least a feeling of empowerment.

Or, you can just let the government steward your hard earned capital.  We all know how that usually works out.

Join us at TDV Blog to discuss…