Letitia James, New York's Attorney General, has asked Congress to prohibit crypto investments in retirement accounts. She stressed that hardworking Americans shouldn't have to worry about losing their retirement savings due to unsteady assets such as cryptocurrencies.
NYAG Letitia James urges Congress to ban crypto investments in retirement accounts
Letitia James, the New York Attorney General, announced Tuesday that she had "urged congressional leaders" to pass legislation prohibiting retirement funds from investing in digital assets such as digital coins, digital tokens, and cryptocurrencies.
James wrote the following in a letter she sent Tuesday to Sen. Ron Wyden, Sen. Mike Crapo (R–ID), Rep. Richard Neal and Rep. Kevin Brady.
For the benefit of New Yorkers, I am urging Congress to adopt legislation that would designate digital assets, e.g. digital coins and digital tokens, as assets that can't be bought using funds in Individual Retirement accounts (IRAs) or defined contribution plans such as 401(k), 457 plans and 457 plans.
James outlined a few reasons why cryptocurrencies should not be permitted in retirement plans. She stated that cryptocurrencies have no intrinsic value and are "often used as a tool for fraud and criminality."
The attorney general also mentioned the terra crash, FTX meltdown and subsequent crypto market sell-offs. FTX, a crypto exchange, filed for bankruptcy in November amid allegations that it had mishandled customer funds.
Attorney General James cited "recent crypto-market crashes and other market turmoil":
The risk of losing a lifetime of hard work could be realized if you invest in crashing cryptocurrency cryptocurrencies.
"We have repeatedly seen the dangers of cryptocurrencies as well as the wild swings in these funds. The attorney general stated that Americans who work hard should not be worried about losing their retirement savings to unsteady assets such as cryptocurrencies.
James asks lawmakers to reject two bills that would allow cryptocurrency investments in retirement accounts. She wrote:
I appeal to Congress to reject the Retirement Savings Modernization Act… as well as the Financial Freedom Act of 2022.
James explained that the Retirement Savings Modernization Act would allow fiduciaries of 401(k), plans to make digital assets available for investment.
The Financial Freedom Act of 2022 would "prohibit Secretary of Labor from restricting or prohibiting investment options offered through a self directed brokerage window, i.e. the Secretary of Labor wouldn't be able to prohibit investments into digital assets," stated the NY attorney general.
Fidelity Investments (the largest 401(k), by assets), began offering bitcoin investments for retirement accounts this autumn. The U.S. Department of Labor has been troubled by this. Janet Yellen, Treasury Secretary, has warned crypto is "very dangerous" and stated that it is not suitable for most retirement savers. Three U.S. senators wrote to Fidelity CEO Abigail Johnson this week to urge her to discontinue offering bitcoin as a retirement account option.
What do you think of Letitia James, New York Attorney General, urging Congress to ban crypto investments in retirement funds? Comment below to let us know your thoughts.
Frequently Asked Questions
What is the Performance of Gold as an Investment?
Gold's price fluctuates depending on the supply and demand. It is also affected negatively by interest rates.
Gold prices are volatile due to their limited supply. In addition, there is a risk associated with owning physical gold because you have to store it somewhere.
What is the best precious metal to invest in?
This question depends on how risky you are willing to take, and what return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. You might not want to invest in gold if you're looking for quick returns. If you have time and patience, you should consider investing in silver instead.
If you're not looking to make quick money, gold is probably your best choice. However, silver might be a better option if you're looking for an investment that provides steady returns over long periods.
Can I keep physical gold in an IRA?
Gold is money and not just paper currency. People have been using gold for thousands of years to store their wealth and protect it from economic instability and inflation. Investors today use gold to diversify their portfolios because gold is more resilient to financial turmoil.
Many Americans are now more inclined to invest in precious metals like gold and silver than stocks or bonds. It is possible to make money by investing in gold. However, it doesn't guarantee that you'll make a lot of money.
Gold has historically performed better during financial panics than other assets. The S&P 500 dropped 21 percent in the same time period, while gold prices rose by nearly 100 percent between August 2011-early 2013. During these turbulent market times, gold was among few assets that outperformed the stocks.
Gold is one of the few assets that has virtually no counterparty risks. If your stock portfolio goes down, you still own your shares. However, if you have gold, your value will rise even if the company that you invested in defaults on its loans.
Finally, gold provides liquidity. This means that you can sell gold anytime, regardless of whether or not another buyer is available. Gold is liquid and therefore it makes sense to purchase small amounts. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
What is a Precious Metal IRA?
An IRA with precious metals allows you to diversify retirement savings into gold and silver, palladium, rhodiums, iridiums, osmium, or other rare metals. These precious metals are extremely rare and valuable. They are great investments for your money, and they can protect you from inflation or economic instability.
Precious metals are sometimes called “bullion.” Bullion is the physical metal.
Bullion can be purchased via a variety of channels including online sellers, large coin dealers, and grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This allows you to receive dividends every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, you pay a small percentage tax on the gains. You also have unlimited access to your funds whenever and wherever you wish.
Are gold investments a good idea for an IRA?
Anyone who is looking to save money can make gold an excellent investment. It is also an excellent way to diversify you portfolio. But gold is not all that it seems.
It has been used throughout history as currency and it is still a very popular method of payment. It is sometimes called the “oldest currency in the world”.
Gold is not created by governments, but it is extracted from the earth. Because it is rare and difficult to make, it is extremely valuable.
The supply and demand for gold determine the price of gold. When the economy is strong, people tend to spend more money, which means fewer people mine gold. The result is that gold's value increases.
The flip side is that people tend to save money when the economy slows. This increases the production of gold, which in turn drives down its value.
It is this reason that gold investing makes sense for businesses and individuals. You will benefit from economic growth if you invest in gold.
Also, your investments will earn you interest which can help increase your wealth. You won't lose your money if gold prices drop.
How much should I contribute to my Roth IRA account?
Roth IRAs are retirement accounts where you deposit your own money tax-free. You can't withdraw money from these accounts before you reach the age of 59 1/2. You must adhere to certain rules if you are going to withdraw any of your contributions prior. You cannot touch your principal (the amount you originally deposited). No matter how much money you contribute, you cannot take out more than was originally deposited to the account. If you are able to take out more that what you have initially contributed, you must pay taxes.
You cannot withhold your earnings from income taxes. You will pay income taxes when you withdraw your earnings. Let's take, for example, $5,000 in annual Roth IRA contributions. Let's also assume that you make $10,000 per year from your Roth IRA contributions. Federal income taxes would apply to the earnings. You would be responsible for $3500 The remaining $6,500 is yours. The amount you can withdraw is limited to the original contribution.
If you took $4,000 from your earnings, you would still owe taxes for the $1,500 remaining. On top of that, you'd lose half of the earnings you had taken out because they would be taxed again at 50% (half of 40%). So, even though you ended up with $7,000 in your Roth IRA, you only got back $4,000.
There are two types if Roth IRAs, Roth and Traditional. A traditional IRA allows for you to deduct pretax contributions of your taxable income. Your traditional IRA allows you to withdraw your entire contribution plus any interest. There are no restrictions on the amount you can withdraw from a Traditional IRA.
Roth IRAs are not allowed to allow you deductions for contributions. Once you are retired, however, you may withdraw all of your contributions plus accrued interest. There is no minimum withdrawal amount, unlike traditional IRAs. It doesn't matter if you are 70 1/2 or older before you withdraw your contribution.
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement accounts
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
Guidelines for Gold Roth IRA
Starting early is the best way to save for retirement. Start saving as soon as possible, usually at age 50. You can continue to save throughout your career. You must contribute enough each year to ensure that you have adequate growth.
You also want to take advantage of tax-free opportunities such as a traditional 401(k), SEP IRA, or SIMPLE IRA. These savings vehicles enable you to make contributions while not paying any taxes on the earnings, until they are withdrawn. These savings vehicles are great for those who don't have access or can't get employer matching funds.
Save regularly and continue to save over time. You'll miss out on any potential tax benefits if you're not contributing the maximum amount allowed.
By: Kevin Helms
Title: NY Attorney General Urges Congress to Ban Crypto in Retirement Accounts
Sourced From: news.bitcoin.com/ny-attorney-general-urges-congress-to-ban-crypto-in-retirement-accounts/
Published Date: Fri, 25 Nov 2022 03:30:13 +0000