This page has been archived and commenting is disabled.
Suspending Money Market Redemptions Is Now Legal; SEC Approves New Money Market Regulation In 4-1 Vote
Zero Hedge discussed a month ago the disastrous prospects of what would happen if the new proposal contemplated by the SEC, which would allow the suspension of redemptions from Money Market Funds, were to pass. Well, in a nearly unanimous vote, Money Market Funds now have the ability to suspend redemptions, courtesy of the SEC's just passed 4-1 vote. This explains the negative rate on bills: at this point, should there be another meltdown, money market investors will not, repeat not, be able to withdraw their money purely on the whim of Mary Schapiro. As the SEC noted: "We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares." Too bad investors' hardships considerations ended up being completely irrelevant.
As a reminder, here is the gist of the proposal as pertains to redemption suspension:
Proposed rule 22e–3(a) would permit a money market fund to suspend redemptions if: (i)
The fund’s current price per share, calculated pursuant to rule
2a–7(c), is less than the fund’s stable net asset value per share; (ii)
its board of directors, including a majority of directors who are not
interested persons, approves the liquidation of the fund; and (iii) the fund, prior to suspending redemptions, notifies the Commission of its decision to liquidate and suspend redemptions, by electronic mail directed to the attention of our Director of the Division of Investment Management or the Director’s designee. These proposed conditions are intended to ensure that any suspension of redemptions will be consistent with the underlying policies of section 22(e). We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares. Accordingly, our proposal is limited to permitting suspension of this statutory protection only in extraordinary circumstances. Thus,
the proposed conditions, which are similar to those of the temporary
rule, are designed to limit the availability of the rule to
circumstances that present a significant risk of a run on the fund. Moreover,
the exemption would require action of the fund board (including the
independent directors), which would be acting in its capacity as a
fiduciary. The proposed rule contains an additional provision that
would permit us to take steps to protect investors.
Specifically, the proposed rule would permit us to rescind or modify
the relief provided by the rule (and thus require the fund to resume
honoring redemptions) if, for example, a
liquidating fund has not devised, or is not properly executing, a plan
of liquidation that protects fund shareholders. Under this provision,
the Commission may modify the relief ‘‘after appropriate notice and
opportunity for hearing,’’ in accordance with section 40 of the Act.
»
- 38895 reads
- Printer-friendly version
- Send to friend
- advertisements -
Anyone have a clue on the penalties for early withdrawal from ones 401k or IRA accounts (held at, say, UBS?). How will the IRS get their "blood of the first born" from one who gets out? Do they tax you the following year, or do they grab it as you withdraw?
For a self-unemployed designer who no longer has an employer who contributes, nor has the problem of "hardship" facing any withdrawal or cash-out, getting the accounts closed and cashed out shouldn't be a problem - except that the broker will freak at losing his commissions…
When I cashed out of my 401k years ago, they took taxes out when I cashed it. If I wanted to claim hardship, I would have had to claim it with my income taxes after-the-fact. That was in 2002. HTH.
Not sure about UBS, but they are required to withhold 20% in taxes before you get the rest unless you're doing institution-to-institution transfer (ie., UBS to Fidelity). If not rolling over, you might owe more or less than the 20% come tax time in April of following year. Plus, if under 59 1/2 you pay 10% penalty on the gross amount (withdrawal amt. before taxes). Bottom line, it is expensive money!
Now, UBS will probably charge commish on any sales, so better to roll over to a discount broker with cheap commish's and then sell even though that's 2 steps vs. one.
If I wait until July 2010 I'll crack the over 59.5 by a month, so I assume the 10% penalty wouldn't apply. But from what you're saying, I could still end up paying a penalty for early withdrawal…
Since I'm on "wife-support" right now, I cash out a bit here and there to supplement. I pay capital gains on that - with the lower long-term tax - but this is in the joint account - not the 401k/IRA's.
So for those two 401k/IRA accounts held, seems like we'll get smacked down, one way or another - unless we roll them to another broker with lower commish and then bail…
i thibnks its a 10 % penaltie for early withdrawals
After almost half a century on this earth - nothing surprises me much anymore. Wisdom through distrust still tastes bitter - no matter how you try and mask it.
Imo, leverage your risk - buy a safe for the home, tell no one - and diversify accordingly % wise in physicals. Protect the fortress and loved ones as you see fit - for me I've exercised my right to bear arms.
Getting "gamed" and knowing it, hurts worse - as the uniformed illetratcy of this country are more concerned about missing an episode of Dancing with the Stars than they are with understanding the looming fiscal disaster "we the people" face.
The markets and the participants, the 401k, pensioner, saving for a rainy day average investor will get crushed again soon.
Housing and commercial market with foreclosures, underwater vlaues, defaults, no starts - it is simply overbuilt. 10+% unemployment,with a true number at 17% - we don't manufacture much of anything in this country anymore - so who is going to hire today or tomorrow? The employed feel "lucky" to have a job - do you really think they are out spending money they don't have? Huge local, state and federal deficits,-- yet citizens still demand what they feel entitled to. So few in this country already pay a huge percentage of the taxes that fund all this - the tea leaves show this is unsustainable. Flooding the world with worthless paper dollars and then we buy our own debt with it. It's a shell game.
It's a mess - and even our debt holders in China and India know it as they buy gold to try and find a semi-safe store of wealth.
Our inept politicians certainly do not have a clue. All one had to do was watch that shameless charade called a state of the union last night. Rhetoric and hand clapping - more of the same.There were no standing ovations on Main Street.
Sorry Dorothy - this ain't no union - of ideas or elected powergrats in Washington. You really think Blarney Frank or Chuckie Schumer is looking out for you and me or that GW had or BO has a clue?
God helps those who helps themselves. I finally understand what grandma meant by that.
Color me a cynic-
Cynic, right on.
I have not read all the comments, so some of this may be repeat. If so, sorry.
It is my understanding that both banks and insurance companies have a period of up to 6 months to produce our funds, said rule intended to prevent the "run on the institution".
Separately, to those who consider themselves "screwed" in their 401k: the law does not preclude you taking out funds while you still work for the company. That is only a common practice, nearly universal because the administrators, brokers, advisors, salesmen, et al want all the volume possible to stay in their. Their compensation depends upon that. So they check the box disallowing withdrawals for active participants. Your employer probably doesn't know the difference. Go ask you HR department to amend the plan to allow this. Truth be told, your execs probably would like more control of their own money also and would jump at the chance to roll into a self-directed IRA, and maybe Roth some funds during 2010.
Chartered Financial Consultant for about 25 years
OBAMA = THE NEXT JIMMY CARTER ... ONLY LESS FILLING AND TASTES WORSE
The only answer for most folks is... physical gold, folks. Buy and carefully hide now, or forever be poor - and totally screwed.
The best answer for non-neutered folks is... invest all your wealth into machinery to produce physical goods, and the more necessary the goods, the better (think "farms").
However, most humans are so far removed from reality, and so totally incompetent in being physically productive, holding platinum, gold, palladium, silver, and other non-perishable goods is the smartest move. Buy a few hundred dollars worth of seeds too.
Make no mistake, the powers-that-be are clearly preparing for the their final theft of EVERYTHING... and this includes retirement accounts (pay the fee/tax and liquidate those accounts), normal savings, EVERYTHING.
The Canadian bank deposits sounds like the most sensible thing anyone has said here. I've looked into Swiss banks, but it seems complicated. Not sure they want you for less than $500k or something.
Gold - Maybe it will go to $2000, or $5000 - or maybe it will go to $300. Things have gotten very weird. Where are the bond market vigilantes, for one thing? Probably cleaning up on the "carry trade," borrowing free money and putting into stocks, commodities, foreign stocks, etc.
"The market will act in ways that inflict maximum pain": When those big boys sense that the free money is about to end they'll unwind those stock and commodity positions, causing gold to tank even as interest rates skyrocket. Or not - as I said, very confusing.
Now, if I can only figure out a way to put IRA money into Canadian banks or short term paper, without excessive transaction costs,
This is reason 17 to get your money out and
buy Gold and Silver that you can pile up on the
Dining Room Table... Do you all see how fast they passed this new law...? This is big news.
Money Market funds are Not FDIC insured funds.
Round up you money.. go to Apmex.com or Monex.com
Buy Silver Maple Leafs and Silver 10 oz. bars.
Buy Gold Maple Leafs... no ETF's. no paper assets..
Time is running out... protect your money..
I have a feeling that many of those so adamantly pressing the "buy" button on gold weren't around in 1980 when it hit $875, and then fell, fell, fell for 20 years thereafter. A nervous young man, I bought a couple circulated Saints then for around $700, and they were embarassing shiny blobs for a long time. (During the Y2K "old U.S. coins only, not bullion" buzz I traded them in for three bullion coins.)
Yes things look a lot different now - Bernake is no Paul Volcker, the Fed has become much more politicized, this is perhaps the most fiscally reckless Congress and President in history (I say that cautiosly)l, and there's no Gipper on the horizon poised to ride to the rescue of capitalism's "animal spirits."
Indeed, that was a very surprising development then, and maybe it was a once-in-a-lifetime "save." It was the start of an amazing 25 year period of growth that completely swept away the previous 'we're all gonna die' psychology. But an entire generation has forgotten the dark days that preceded, so maybe we are doomed to a decade or two or more of depression and turmoil, and gold really is the thing.
My point is, the glib assertions to that effect should be taken with a big grain of salt.
Jack (author of the "Canadian bank deposits sounds like the most sensible thing" post)
S
This is Big News ... They know things are falling apart... Money Market accounts are not FDIC insured and now this... People need to have at least 30 % of thier $$ in Silver Maple Leafs and Gold Maple Leafs... Keep them at our house...not at a Bank.... Time is running out.. All these paper investments are junk... the US Dollar is Dog Food....
Investors will never be able to buy shares near the bottom of bear market cycles, because to move from Money Market funds to Equity requires a redemption of shares. Imagine WANTING to buy in a down, lock limit sell off and not being allowed to!
dear gold lovers/haters
Gold is such a nice,usefull fanancial tool.
If you invest in your pension you should put a nice % in
precious metals.Why?? Simply because it wil always buy you
something.One golden or a few silver coins will always buy
you your food,energy,medican! etc.When a monetairy cricis
happens your in big trouble when your old!!!Then your gold/silver will be your last man standing.Protect yourself and your family.In spite of all the troubles lately and
pr metal prices going up for 10years there has never been a
time where simple workers could save up this much pm.
My grandfather once told me that a girl working for a rich
family only earned ten gilders(gold) a year.That's 6 grams of gold.In ancient times when silver was money the average
month salary was about 2 ounces.I'am just a simple factory
guy but i am grabbing my chance now for a few years and buy
a bit of it monthly.If i am not doing it for myself I am
doing it for my son.Your American constitution has convinced me I just love this document.Get your gold now
before your last in line.Get your hands on it and i mean the real stuff.I don't care about the price that much because it will be there when most needed.A lot of my friends get sliced fanacially (houses,shares,stupid fanancial products etc)while my net worth just grows.I tried
to warn them but ignorance, like I was myself in the past and lost a lot of money.I also was scamed by eagon(Insurance
company)and the list go's on and on and on.I just feel sad
when i see hard workers get sceemed in europe,america,china etc It has to stop,we need honest money because without it
there is no pension at all.10000000000000000000times 0 is still 0!!!
Take care a friend from Holland
very good advice. I also woke up a while ago and agree with you 100% a little every week adds up fast!!!
I have some physical gold and silver. I am wanting to pull cash, as stated above, mattress money, sounds like a wise move at this juncture. I have about $700,000 in cash in different accounts. I am thinking that I should probably start hoarding now, any thoughts? Under $10,000 at a time I believe is the rule, before it gets reported by the bank. Is that still the case? At this rate it will take me a very long time to withdraw, is there a better way? But what about investing in other currencies? I have read and heard that the Swisse franc is still a pretty stable currency. How difficult is it to trade some of my $'s for another currency? Is that something my broker should be able to do?
I do things differently. I'll never tell them where my mason jars full of silver and cash are. there are no early withdraw fees, 24 hour access, and my silver is so far ahead of what I paid for it who cares about the dips.
"Quick tips for everybody?"
Yea
1) NEVER TRUST THE BANKS
2) NEVER TRUST THE GOVERNMENT
3) Refer back? to tips 1 and 2
Yep... amerikkka Is DONE Son!
PALM BEACH GARDENS, Fla., April 9, 2001 — Eight online brokerage firms were downgraded based on recent deterioration in their financial condition according ...Weiss Ratings News: Eight Online Brokerage Firms Downgraded As ...
www.weissratings.com/News/Broker/20010409broker.htm
system still duplicating comments
Its one of the good platform for awareness of people. Keep sharing such stuff in the future too. xbox 360 slim
I found
lots of interesting information here. The post was professionally written and
I feel like the author has extensive knowledge in the subject. Keep it that
way
mastersdegree in coaching
This is very good blog and I also show you some imformation through this .
House Cleaning RI http://www.themaidsri.com