Hackers like to target retirement accounts. It is a fact of life. In fact, because retirement accounts often contain so much money, (Fidelity says a record amount of IRAs or 401(k)s it has manage balances of $1 million or more) your retirement account may be your most targeted asset. With Self-Directed IRAs, it is important to make sure you get the security right.
Many investors like to be in charge of their own long-term financial destiny. To do this, they take the reins over their retirement accounts, self-direct, and begin selecting their own investments. But this amount of independence can sometimes mean that you have to think about risks like security. Are Self-Directed IRAs secure, and if so, how can you keep it secure? After all, your IRA may end up being the single largest account you hold throughout your life. Here is what you will need to know about keeping it secure.
Understanding Self-Directed IRA Security
One of the first things you have to understand about a Self-Directed IRA is that you won’t be alone. Working with a reputable Self-Directed IRA administration firm like American IRA means that you have someone in your corner who takes your security just as seriously as you do. Here are some of the provisions we have put in place to ensure that your account remains secure:
- Signed Buy Direction Letters. One of the rules we have in place here at American IRA is that unless there is a signed Buy Direction Letter from you—explicitly stating what you would like to invest in—then no money moves from the account. This is a great stopgap to ensure that everything we do, we have the proper paperwork and directive from you to back it up. We understand our role as the administration firm and not someone making your decisions for you.
- Wire and ACH instructions will not be implemented until you have signed them as both read and approved. Because wire and ACH transactions can be relatively straightforward, it is integral for the security of your account that you first sign off on these transactions as read and approved before anything happens.
- Double-checking for compliance. One of the key issues for any Self-Directed IRA administration firm is that the investor should be confident that the forms and paperwork they file are compliant with retirement regulations. We assign an American IRA Compliance Officer to review paperwork with funding documents, making sure that wire transfers, ACHs, or checks are valid before being issued from an account.
- Encrypted emails. Digital communication is a boon to all of us—but only if it is secure. To that end, we use encrypted emails for communication with clients, ensuring that fast communication is possible without unnecessary exposure to security risks.
- Confirmation calls. We believe that retirement is important enough to double-check on security. That is why we also offer confirmation calls to ensure funds are properly released, as you directed. It is a quick phone call from your end, but vital in ensuring that the money coming out of your account is coming out as designed, for a specific transaction/purchase.
Maintaining a Higher Level of Security
With all of these protocols in place, it’s very difficult to encounter a security snafu. One of the reasons it can be so beneficial to work with a Self-Directed IRA administration firm is that we can take a lot of the load off your hands. We do not make investment choices or decisions for you—but we can follow up on your buy directives to ensure that you are indeed the one making the decisions.