IRA Investments - Caveat Emptor

Many of us are often solicited for strategies involving alternate investments for IRAs. You should have your antenna up when being solicited and when the solicitor states that the investment is either “IRS Approved” or endorsed by the IRS.

There is no such thing as an “IRS Approved” investment and the IRS does not:
• Review or approve investments
• Endorse any investments
• Advise individuals on how to invest their IRA assets
• Issue any statement that an investment in an IRA is protected because a particular trustee or custodian has been approved by the IRS

The IRS does however:
• Issue letters to IRA sponsors, trustees and custodians certifying that they are complying with requirements concerning investor rights, account administration, and standards for the establishment of documents that allow contributions to be deductible
• Specifically prohibit investing IRA funds in life insurance products of any kind and in collectible assets

You should carefully consider the soundness of your IRA investments and be aware of the current rules for IRAs. You can get a free IRS publication on how to establish, contribute to, or deduct your contributions to an IRA by calling (800) TAX - FORM (829-3676). Ask for IRS publication 590, “Individual Retirement Arrangements (IRAs).” You can also download this publication at www.irs.gov.

Here are some helpful hints to keep in mind when considering your IRA investments:

• Avoid any investment touted as “IRS Approved” or otherwise endorsed by the IRS
• Beware of promises of no-risk, sky-high returns on exotic investments
• Don’t buy an investment on the basis of a television “infomercial” or radio advertisement
• Never transfer or rollover your IRA funds directly to an investment promoter
• Always check out an investment and promoter before you turn over your money

In addition, always get a copy of the IRA agreement when opening a new IRA account. If the investment firm cannot supply an IRA agreement, you probably do NOT have an IRA account.

By IRA Technical Consultant Marvin Rotenberg and Jared Trexler
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