What Types of Misconduct Can Occur With Self-Directed IRAs? - Transcript

So there’s a few ways that investors get into trouble with self-directed IRAs sometimes it might be their own fault they’ve relied and trusted in someone who was a Ponzi schemer or was engaging in Affinity fraud or some other kind of Fraud

And you know you can always go against the fraudster but they often are very flashy to show success that isn’t real and they have great cars that are released and great homes that have very high mortgages and money winds up.

Offshore and wherever so that’s one thing if you’re in a traditional brokerage account and you transfer money to a self-directed IRA on the recommendation of an actual licensed broker or a registered investment advisor.

There may be some liability there by the brokerage firm or the registered investment advisor for failing to detect that the broker or the investment advisor was asking you to transfer money outside the firm and maybe an outside business activity that they are supposed to monitor.

So that is one Avenue where um you you need to be very diligent if someone’s telling you to take money out of an IRA because you only have 60 days to get it back into an IRA account before you get taxed on the full amount of the IRA as if it’s an early distribution.

Certain people who have invested in things like Ponzi schemes and thought Oh you know it’s it’s Ira money and and the Ponzi schemer says oh I’m putting in an IRA account which is not really an IRA account at all our surprise not only did they lose all of the money but they’ve also had a tax liability for you know up to 50 percent of the IRA assets which is just a huge penalty.

There are certain tax regs that you would have to go over with your accountant to try to mitigate those uh damages um and you know you can seek to go against a brokerage from an investment advisor.

If you were directed to do it by a broker so those it’s a really some ways that you need to look at what’s going on with these self-directed IRAs to make sure that you’re not getting harmed.