IRA Scams

As I have previously discussed, the IRS is in the process of tightening restrictions and regulations on IRAs, and if a planner is not careful it could cause problems for the beneficiary of the IRA. Now, it appears that other problems can arise with a particular type of IRA. The government is now increasing its scrutiny of self-regulated IRAs. These IRAs allow an investor to choose from variety of alternative investment options. These options are usually not publicly traded commodities, and the assets of are typically held for a long time. The IRA to be more likely to be subject to fraud because of the nature of the assets and the length of time that the assets are held.

Even with these problems, these types of IRAs are still attractive to a number of investors who are interested in investing in alternative sources of income. A person who wants to invest in a self-regulated IRA might want to be more cautious about who they are investing with. For example, a person might want to be wary if the business tells that person that his or her “investment is ‘guaranteed or safe without nay real substantial basis for those claims.'” A person might also want to be wary of policies that tell a person to act fact or lose the opportunity, or “provides an additional level of analysis or oversight.”

See Kelly Greene, How to Avoid IRA Scams, Wall Street Journal, July 27, 2012.

Special Thanks to Brian J. Cohan for bringing this article to my attention.