The good news with Self-Directed IRAs: you can have more freedom of investing when you choose to direct your own retirement account. The bad news: the freedom to build wealth comes with the responsibility to avoid losing it. That’s true in many cases with any investment. But with Self-Directed IRAs, many investors have to watch out for scams that seek to take advantage of those with an account. In a recent report, the government said that it doubled its efforts to enforce against Self-Directed IRA scams. This can be great news for anyone with a Self-Directed IRA who wants to avoid them. But what are some ways that Self-Directed IRA holders can watch out for scams that target their retirement assets? Here are some ways to stay on the lookout.
Work with an Established Self-Directed IRA Administration Firm
The best way to avoid scams is to work with someone you trust in the first place. True: with Self-Directed IRAs, an administration firm is not a brokerage or a fiduciary. They’ll simply administer the account. But some scammers target Self-Directed IRA holders by having those holders give them access to the account. To avoid this kind of scam, you’ll want to look up the history of the Self-Directed IRA administration firm you’re considering. Is the Self-Directed IRA firm long established? Does it have a solid reputation? Does the website have history? When you call them, does it sound like a professional business that has been doing this for a long time?
At American IRA, we’re used to clients approaching us with confidence that we have that kind of reputable history. But we know that many people researching this for the first time can feel skeptical about the Self-Directed IRA administration firms they choose. Be willing to put in a little bit of time with your homework before you select yours.
Watch Out for the Warning Signs of Self-Directed IRA Scams
We’ve previously written about some of the most obvious signs of Self-Directed IRA scams, but it’s worth rehashing some important ones:
- Lies about custodial responsibilities are a particular tip-off that you’re looking at a scam. If a Self-Directed IRA “administration firm” is telling you that there are certain assets that guarantee against losses, for example, it’s a scam. There is no valid investment that has total protection from the risk of going down.
- Watch out for unsolicited contact. Scams will sometimes call you without your permission. But at American IRA, we invest in great information on our website and ask for people to sign up with their own email address.
Be Vigilant and You’ll Generally Do Well
It’s not something that many retirement investors are used to. Many retirement investors are used to a “set it and forget it” model of investing. They want money taken out of their paycheck, that money to go somewhere unseen, and to rely on retirement happening for them easily. But anyone who’s directed their own retirement strategy knows that it’s more involved in that. You have to be vigilant about your own assets. You have to be proactive about maintaining a strategy. And to prevent being exposed to possible retirement investment scams, you always have to be on the lookout for things that appear too good to be true.
The best way to do it is to get connected to a Self-Directed IRA administration firm with a long history of providing outstanding services to its clients. But always remember that with self-directing, you’re the one in charge. Do it right and you’ll avoid scams for a long time.